Donchian Channel Reversal Strategy (Python)

Donchian Channels mark recent highs and lows over a chosen period. Prices that pierce those boundaries and then reverse can signal exhaustion. This strategy watches for closes back inside the channel after a brief breakout. If the previous close was below the lower band and the current close moves back above it, a long trade is taken. Conversely, if the prior close was above the upper band and price falls back inside, a short is opened. A percentage stop manages risk in both cases. By trading only after a failed breakout this approach attempts to capture false moves that quickly retrace.

• Entry Criteria: Price closes back inside Donchian Channel after breaching upper or lower band.

• Long/Short: Both.

• Exit Criteria: Stop-loss.

• Stops: Yes, percentage based.

• Default Values:

• Period = 20

• StopLoss = 2%

• CandleType = 15 minute [*]Filters:

• Category: Reversal

• Direction: Both

• Indicators: Donchian Channel

• Stops: Yes

• Complexity: Basic

• Timeframe: Intraday

• Seasonality: No

• Neural networks: No

• Divergence: No

• Risk level: Medium