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Thread: Donchian Channel and other breakout methods

  1. #1

  2. #2
    Quote Originally Posted by ;
    For the Donchian Channel, what are the calculations for the Donchian Channel? Given that you're talking a 1hr Time Frame. Are you really saying 19 closes enough to get a 1hr Chart?
    Just use the last one in place 48 above. It's a really neat indior. I believe that it's set at 28 intervals which is perfect for our purposes. I'm not talking a 1 hour time period. Where did you get that from?

  3. #3
    Quote Originally Posted by ;
    quote I have been looking for both Donchian and Bollinger Bands methods - this is the first post that I have ever read where they are both said I am looking at exactly this plus reading candlesticks of course....
    You may be interested in this post:

    http://www.investopedia.com/articles...dschannels.asp

  4. #4
    Quote Originally Posted by ;
    quote You may be interested in this article: http://www.investopedia.com/articles...dschannels.asp
    Thanks for this RedLineFred. It provides great food for thought. :-)

  5. #5
    Oh wow I wish I found this thread earlier, channeling is king. Add in certain breakout patterns, Harmoinc and OBV and you have yourself some stuff that is amazing. I find trading this way really helps to identify areas of consolidation. Tied in with volume revealing the weakness or strength.

  6. #6
    Thank You RedLineFred, I had never really Researched Kelter Bands but I'm looking at them

  7. #7
    Here's a neat trick you can do using Donchian Channels:

    If you choose a daily chart and obstruct out our area of interest:



    Then visit a monthly chart and add a few Donchian Channels:



    You can see I've blocked out our area of interest for the period 1987 (the year I was born) into 2009, which is over 20 years. Everywhere we see the Donchian channel flat line is an area of support or resistance. With this demonion I have just indicated the 1992 reduced that held for 4 weeks or so, you. The price is 118.65. That is where the price is now.

    Let us look at the hourly rate chart today, where the price has revisited this level after over 5 years under. This was November last year:



    We get an hourly snare pub. The price retraces over 100 pips. So people utilizing longs to shut and were watching this level. Very long term longs, I imagine. Furthermore, if you study the hourly rate chart since then, scalpers and day traders have obviously been utilizing the level for buying and selling.

  8. #8
    Channeling is a very strong identifiion of price consolidation, Using this kind of approach on a significantly lower time frame is able to demonstrate these breaks faster then the greater TF. This is from the market, the majority of the time(dont have the data ) going to the greater timeframes channel/SR. I add to possess affirmation with VOLUME. Looking for divergence or convergence to show the weakness.

    Example 3 minute station. Price made a daily high and retrace. I know alot of traders such as the fibos etc to recognize those points. I dont care about that, the whole idea is to find these new areas of consolidation. They grip, sometime they dont. Sometime price divide back into the channel and will hover above or below. Thats trading no system is perfect. Once letting go of this belief it is much simpler to wait for those key turning point or in this case breakouts.

    When the retrace is recognized I find Im able to draw the station. From here watching SR, I typically presume price will continue to station and trade it. This is like playing a game or poker. Waiting for the defender to opt for the hit and you deke around him or waiting for the competition to fold . This takes time to comprehend the market. THats why I also use Breakout Patterns and Harmonic. However, the important thing is identifying the station with affirmation with OBV.

    Once price breaks on the lower time frame, it gets confirmed with the divergence of OBV. Then of course tries to come back to the station. Previous Support turning to Resistance and then price drops 300 points. Text book channeling.


  9. #9
    Quote Originally Posted by ;
    Oh wow I wish I found this thread earlier, channeling is king. Add in certain breakout patterns, Harmoinc and OBV and you got yourself some remarkable stuff. I find trading this manner helps you to identify areas of consolidation. Tied in with quantity revealing the strength or weakness. picture
    Nice charts and methods Cogs. Thank you for your input. I will study what you have been doing.

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