Donchian Bandwidth

Creator: Richard Donchian

Period: 20

Average period: 20

In the Donchian Bandwidth indicator, two lines are plotted below the chart.

1 – Green line represents Donchian Bandwidth

2 – Red line represents the Average

As long as the price is higher than the price of the previous 20 periods, the upper band of the indicator will be rising. It is a bullish sign. The lower band will fall when the price is at the 20-period low, which is a bearish indication.

The period of 20 can be changed by the user.

When the width of the channel increases, the Donchian width indicator rises. If the channel width is high, the indicator will rise. This indicates a wide range between high and low, which suggests a higher level of volatility. The falling indicator line indicates that the range is constant or reducing, which indicates a decrease in volatility.

Click here to know more about Donchian Channel.

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.