The Donchian channel was invented by a trader called Richard Donchian. The two bands of the channel are based on the highest high and the lowest low of a set period. Donchian himself based both channel bands on the highest high and the lowest low of the last 20 days. Donchian would consider opening a long position when the market price goes above the 20-day channel. Alternatively, he would consider opening a short sell position when the market price goes below the 20-day channel.
Another trader, Curtis Faith, who worked on the Turtle Trading system, uses fairly similar values for the two bands. In the case of Faith he opens a position when the market price crosses a 20-day channel. He then, however, uses a 10-day channel as his stop. The Donchian channel is also used by German trader Birger Schäfermeier for closing positions.
This example shows a Donchian channel with both bands based on 20-day periods.