Donchian channel
The Donchian channel marks the highest high and lowest low of the last 20 sessions as an envelope around price, making the recent trading range itself a visible, screenable object.
There is no calculation to explain: the upper line is the highest high of the last 20 bars, the lower line the lowest low, and the middle their midpoint. Richard Donchian drew it in the 1960s and it remains the most transparent envelope in technical analysis — no averaging, no weighting, no statistics. The channel only moves when an extreme falls out of the window or a new one is set, so it steps rather than glides, holding flat through everything in between.
Its fame is the Turtle traders' entry: buy the break of the 20-day high, sell the break of the 20-day low, a rule simple enough to hand to novices and profitable enough, in trending decades, to be worth handing over. The screening subtlety is that today's high is part of today's channel, so the naive comparison triggers on itself — the honest test compares the close against the previous bar's upper channel, donchian_upper[-1]. The channel's width doubles as a volatility read, and the middle line as a crude trend line.
The failure mode is inherited from breakout trading generally: in a rangebound market the 20-day extremes are exactly where reversals happen, so the strategy buys tops and sells bottoms repeatedly, bleeding small losses while waiting for the trend that pays for them. Donchian systems historically endure long losing stretches punctuated by large wins — a distribution most discretionary traders abandon at precisely the wrong moment.
Against Bollinger and Keltner channels the distinction is what defines the edge: theirs is a statistical distance from an average, Donchian's is the literal extreme — a price where someone actually traded. That makes a Donchian break an event (the range is exceeded, by definition) where a band touch is a measurement.
In Sift
Written as donchian().upper / .mid / .lower. A working scan — stocks closing above the previous session's 20-day channel top on elevated volume:
where close > donchian_upper[-1] and rel_volume > 1.51
of the 500 most-traded NSE stocks match today, as of 20 Aug 2026
Common questions
What is the Donchian channel breakout strategy?
Buy when price exceeds the highest high of the last 20 sessions; exit or reverse at the 20-day low — the rule the Turtle traders made famous. It is pure trend-following: many small failed breaks paid for by the occasional large trend. Its long losing stretches are well documented, and its record on any NSE stock is replayable here.
Why compare against the previous bar's channel?
Because today's high is part of today's 20-bar window, so "close above the channel top" can never fire on the naive comparison — the channel moves with the price testing it. Screening against donchian_upper[-1], yesterday's channel, asks the real question: did today's close exceed everything traded in the prior 20 sessions?