Donchian Channel with EMA Indicator
Platform: MT4 Type: Channel Last update: September 30, 2024The Donchian Channel with EMA for MT4 is a trend-following indicator containing, as the name suggests, Donchian Channel and Exponential Moving Average.
The bands of the Donchian Channel can be used to identify the trend, breakout, and volatility of the market and are calculated on high and low of the past market data. It works as a trend direction filter.
How to use donchian channel with ema in practice?
Signals provided by the Donchian Channel with EMA are really intuitive and will not cause you difficulties. Simply follow the suggestions below.
Buy Entry: First, identify higher high and higher low structure formation in price action. Price should trade over 20 EMA and EMA should be pointing upwards. Open long trade when the price hits the upper Donchian Channel band. Place your stop loss a few pips below the last swing low.
Sell Entry: First, identify lower high and lower low structure formation in price action. Price should trade below 20 EMA and EMA should be pointing downwards. Open short trade when the price hits the lower Donchian Channel band. Place your stop loss a few pips above the last swing high.
Exit Trade / Take Profit: Close your open position when the price cross below 20 EMA when long trade or cross above 20 EMA when short trade, or use your own preferred method of trade exit.
Example of AUD/JPY M15 Chart
This screenshot below shows an example of the Donchian Channel with EMA Indicator in action.
