Donchian Channel Width

Donchian channel width is the height of the Donchian channel. It is the full high-to-low span of the last N bars, not a smoothed average of ranges and not a standard deviation. A new high or a new low widens it immediately. It narrows only when the extreme bar ages out of the window. That ageing step is abrupt, which is honest: the width is a fact about two prices, not a statistical estimate.

A narrow width means the market has not made a new extreme in a while and the old extremes were not far apart. It is a compression reading. A sudden widening is a break of the prior N-bar range, which is the Donchian breakout itself. Watching the width and watching the channel break are the same event seen two ways.

Use a multi-month low in width as a squeeze context before a breakout system arms. Use the point width as the recent noise span: a stop inside that span is inside the range you just measured. Compare percent width across markets if you want to see which one is actually quiet.

Expecting the width to fall smoothly after a spike. It stays wide until the spike bar leaves the window, then it can drop in one bar. That drop is not volatility "collapsing" in the market. It is the window forgetting. Also confusing this width with ATR, which includes typical bars rather than only the two extremes.

Two bars set the whole number. One bad tick at the high, if it is in your data, sets the width for N periods. Clean the data. And width has no direction. A wide channel can be a rally, a selloff, or a violent range.