The Donchian Channels System Metatrader 5 forex indicator is known as a great trend following system that can be attached to any currency pair.
The indicator is an enhancement from its original version (Donchian Channels).
As a volatility based indicator, Richard Donchian (the originator of the indicator) himself advises the use of the 20 period when building the channel, which was adhered to here as well.
This he said was as a result of 20 being the average number of days in a month that trading gets conducted.
Some of the changes that were carried out in the Donchian Channels System includes the implementation of a breakthrough system using the original version of the indicator.
When price breaches the medium sea green or magenta bands, the color of the candlestick gets altered in a manner that depicts the corresponding trend direction.
The EUR/USD H1 chart below displays the Donchian Channels System Metatrader 5 forex indicator in action.
Basic Trading Signals
Buy Signal: Go long when the candles turn dodger blue or medium blue as they break above the upper donchian channels (upper medium sea green band) of the Donchian Channels System Metatrader 5 forex indicator.
Sell Signal: Go short when the candles turn purple or deep pink as they break below the lower donchian channels (lower magenta band) of the Donchian Channels System Metatrader 5 forex indicator.
Exit buy trade: Close all buy orders if while a bullish trend is ongoing, price breaks below the lower donchian channels (lower magenta band) of the Donchian Channels System indicator.
Exit sell trade: Close all sell orders if while a bearish trend is ongoing, price breaks above the upper donchian channels (upper medium sea green band) of the Donchian Channels System indicator.
Tips: Adding a technical indicator like the Parabolic SAR to the Donchian Channels System indicator will further enable traders make informed exits when holding intraday/swing trades.
MT5 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 5
Type: chart pattern indicator
Customization options: Variable (Margins), Colors, width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: volatility | trend
Copy and paste the Donchian_Channels_System.ex5 indicator into the MQL5 indicators folder of the Metatrader 5 trading platform.
You can access this folder from the top menu as follows:
File > Open Data Folder > MQL5 > Indicators (paste here)