In a simple word, Donchian Width is a derivative of the Donchian Channel indicator.
DW indicator measure Donchain bands high and Lows width.it’s measure upper band and lower bands gap. Then show the value by drawing a line. The line will oscillate with the changing of upper and lower bands gap distance.
So when the upper and lower bands gap Increasing then, the DW indicator line will rise up. And when the upper and lower band gap is narrow then the indicator will flat.
DW indicator measure volatile of a specific period. It’s will show a specific Period high and Lows gap. When the market is volatile then the DW indicator will fluctuate more.
Donchian Width Setting
Go to studies and search for ‘Donchian Width’
Setting
- High Period: By default, the period is 20. This means 20 periods of the high price will take to show width from a specific period low price.
- Low Period: By default value is 20. This means 20 Candle Low price will take to show width from a specific period High price.
- Result: This is the DW Indicator Line color.
Donchian Width Calculation
Donchain Width formula= Specific Period High- specific period Low.
the calculation is very simple, This indicator shows Donchain Channel High and low distance. And measure Gap between upper & Lower band.
What this indicator Tells you
- This will show a specific period high and lows difference.
- DW will tell you specific Period Volatility.
- Also DW shows historical high and Lows distance.
Donchian Width Trading Strategy
You can use the DW indicator with a combination of RSI indicators. When DW indicator rising and RSI Line also moving up and cross 50 Level. This is the buying signal. You can exit when DW Line is falling and RSI indicator Touches 50 line.
Selling Signal with RSI. When DW indicator Rising and RSI line crossing 50 line and Moving downward direction. This is the selling Signal. You can exit when DW Line is falling and RSI indicator Touches 50 line.
Conclusion
Donchain Width Indicator is the derivative of the Donchian Channel indicator. This will show the width of ṭhe Donchian bands. When High and low’s difference is high then the indicator will rise up.
*Read Related Post For More Information