Determine Price Action Using Channels

I read a decent article today about Donchian and Keltner Channels.  I’ve had limited  experience with both of them in the past but after reading this article, I really can see their usefulness. 

The Donchian Channel indicator, sometimes referred to as the Moving Average Indicator is used to capture short-term bursts or longer-term trends.  Quite simply, when price action breaks through (and closes) above the upper band, a buy signal is created.  When price action breaks through (and closes) below the lower band, a sell signal is created.  This indicator works a little different than one might think because when the price breaks a lower or upper band, THIS DOES NOT SIGNAL A REVERSAL.  This actually signals a new trend establishing itself.  As with all indicators, Donchian channels should be used with other confirmation indicators.

The Keltner Channel is a reversal indicator.  It looks similar to a Bollinger Band except that it uses high and low prices to represent volatility instead of standard deviation.  If price action breaks above the band, traders should consider shorts.  If price action breaks below the band, traders should consider longs. 

Here is an actual example using a current JPY 60-minute chart.  This example shows sell signals being created from the Keltner Channel.

 
After looking for an example where a Donchian Channel generated a buy/sell signal, I’ve given up.  Can anyone find where an upper or lower band was violated by a closing price.  I cannot.

The full article can be viewed at http://www.investopedia.com/articles/forex/06/BandsChannels.asp.

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