The highest high and lowest low of the last n candles.
The upper line is the top of the recent range, the lower line the bottom. In TradeXtool the channel is built from the previous n candles, so 'price crosses above the upper line' is a real breakout to a new high.
Breakout systems (buy a new 20- or 55-candle high) are some of the oldest trend-following rules there are.
Worked out by the same code the builder uses, on stored daily candles. Move a setting and the line moves with it. This is what happened, not what will happen.
Entry: Price close crosses above Donchian(20) upper.
Most breakouts fail; the system relies on a few large winners. Expect a low hit rate and use a trailing stop.
No indicator predicts the market on its own. Build the rule, then test it on years of history with fees included. Try TradeXtool free for 14 days.