Highwater — the Donchian channel breakout, the turtle classic.

The high-water mark

The Donchian channel is the simplest breakout tool there is: the highest high and lowest low of the last twenty bars, drawn as a band around price. The upper rail is the high-water mark — the level the market has not managed to clear in a month of trading.

The band renders on your chart, so you can see the range compressing and expanding as the market coils and releases.

Riding the expansion

A close beyond the rail is the trade. This reads the PRIOR channel rather than the live one — a subtle but essential detail, because a channel that includes the current bar can never be broken by it. The level is set before price gets there.

The target is deliberately distant at 4R. Breakout systems win by letting a small number of large moves pay for a long tail of small stops, so cutting the target short defeats the whole design.

The settings that matter

Channel Period sets the memory — how many bars define the high-water mark. Longer demands a more significant break and trades less often; shorter reacts sooner and takes more.

Cooldown Bars stops one long expansion re-firing entries as price grinds along the rail, and the 4R target with an ATR stop shapes the payoff.