Combining a trend-following technique along with a stochastic enables you to make sure you are buying pullbacks in uptrends, selling rallies in downtrends and taking advantage of the temporary extremes during sideways trading range affairs.
These two indicators, the Donchian channels and the stochastic, work well together in this regard.
To turn this concept into a workable trading plan you need to review the history of your preferred currency markets to determine the best points to exit losing trades, take profits and ensure any unique attributes are accounted for in your approach. For example, it could turn out a 70-period channel is too long or there is a more appropriate lookback period for the stochastic oscillator.
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