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Stella Osoba’s article, “Using Price Channels,” explains Donchian Channels and offers a system to trade them. MetaStock includes Donchian Channels in its list of indicators but uses a different formula for the center band. Below are the MetaStock formulas for the version described by Stella Osoba. Also included are the suggested entry signals and middle band exit formulas. Donchian Channels:
Indicator:
Code:x:= Input("periods",2,100,20);
Ref(HHV(H,x), -1);
Ref(LLV(L,x), -1);
Ref(HHV(H,x)+LLV(L,x), -1)/2
Buy Signal:
Code:x:= 20;
Cross( H, Ref(HHV(H,x), -1) )
Sell Signal:
Code:x:= 20;
Cross( Ref(HHV(H,x)+LLV(L,x), -1)/2, L)
Sell Short Signal:
Code:x:= 20;
Cross( Ref(LLV(L,x), -1), L )
Buy to Cover Signal:
Code:x:= 20;
Cross( H, Ref(HHV(H,x)+LLV(L,x), -1)/2 )
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