There are several ways of interpreting and trading the Donchian Bands indicator. The most commonly used is the breakout:
- Long Trades – Long trades are entered when price breaks above the 20-period Upper Donchian Band. Conservative traders wait for price to close above the Donchian Upper Band to enter.
- Short Trades – Short trades are entered when price breaks below the 20-period Lower Donchian Band. Conservative traders wait for price to close below the Donchian Lower Band to enter.
Download link: [Donchian Bands indicator]