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Price is testing or breaking through Donchian channel boundaries with structural confirmation. Volume confirms participation and trend strength shows directional conviction.
State
Donchian channel breakout
Emergence
Price breaking through Donchian channel boundaries with volume and trend confirmation. When Donchian channel signals indicate a boundary test, volume confirms participation, and trend strength shows directional conviction, the channel breakout has structural backing.
Limits
This story identifies a channel breakout, not continuation prediction. It does not claim the breakout will sustain, predict direction or magnitude, or guarantee follow-through. Channel breakouts can be false signals.
Explanation
Each signal represents an independent observation: Donchian Channels measure price relative to its highest high and lowest low over a defined period. Extreme readings indicate price is testing channel boundaries. Volume Breakout confirms the move is accompanied by elevated trading volume. Participation distinguishes genuine breakouts from noise. Trend Strength measures directional conviction. Strong trend during a channel test indicates the market has directional intent. When all three align, they describe a Donchian channel event with structural confirmation.
Interpretation
This story identifies a channel event, not direction guarantee. It does not predict continuation, guarantee the breakout holds, or indicate timing. Channel breakouts can fail and reverse.
Required Signals
Trend Strength
Combined moving average separation and net price displacement