Donchian Channels
A Donchian Channel is a technical indicator showing the range between an upper band (highest price) and a lower band (lowest price) over a set period, with a median line based on the moving average of a security’s price. Visually, it forms three lines: the upper, lower, and middle. Traders use it to spot breakouts or trends—prices hitting the upper band signal strength, while the lower band indicates weakness. It’s a simple, effective tool for gauging volatility and potential price reversals in markets.
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