Donchian Channel Forex Trading System

Donchian Channel Forex Trading System combines multiple Donchian Channels and RSI to come up with a strategy that follows the trend and signals the trades within the direction of the current momentum of the market. These channels also help traders to update their stop positions and finding trade exit points as well.

Donchian Channel Forex Trading System can be applied to trade any forex currency pair you like. Besides, this system fits with all sorts of short-term & intraday timeframe charts like M1 to H1 within the MT4 trading platform.

Donchian Channel Forex Trading System Overview

Install the System at your MT4 terminal and load it on your chart. Once you’re done, your trading chart will appear like the following image 

Donchian Channel Forex Trading System Overview

Also Read: CAP Channel Indicator

Donchian Channel Forex Trading System Anatomy

Donchian Channel Forex Trading System Anatomy

  • Donchian Channels1, 2 & 3: These channels simply plots the possible current support and resistance level of the market price. Donchian Channel 1 & 2 works for short-term charts like M1 to M15, whereas Donchian 3 is ideal for intraday timeframes like M30 and H1 charts.
  • 20 & 100 LWMA: LWMA stands for Linear Weighted Moving Average. These 20 & 100 LWMA have been used to identify the crossover trend signals. 100 LWMA is greater than 20 LWMA signals the bullish trend. On the other hand, 100 LWMA moves below 20 LWMA is considered as the bearish crossover trend signals.
  • Dynamic Zone RSI: This indicator has been included to identify the possible swing level of the market. RSI level at 50 signals the oversold condition and at 80 indicates the overbought condition of the market. The main RSI slope is also enveloped with a dynamic channel in order to identify the possible diversion of RSI movement.

Donchian Channel Forex Trading System: Buy Parameters

Donchian Channel Forex Buy Parameters

  • Price is supported by any of the Donchian Channel’s lower band
  • 100 LWMA moves above 20 LWMA
  • Dynamic Zone RSI moves near 50 level
  • Buy triggers when all of the above conditions are met
  • Set stop loss below the lower band of the Donchian Channel3
  • Exit long/take profit whenever Dynamic Zone RSI moves downwards from its 80 level 

Donchian Channel Forex Trading System: Sell Parameters

Donchian Channel Forex Sell Parameters

  • Price is resisted by any of the Donchian Channel’s upper band
  • 20 LWMA moves above 100 LWMA
  • Dynamic Zone RSI moves near 80 level
  • Sell triggers when all of the above conditions are met
  • Set stop loss above the upper band of the Donchian Channel3
  • Exit short/take profit whenever Dynamic Zone RSI moves upwards from its 50 levels.

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