Turtle Zone (TZ)

Turtle Zone (TZ) is a channel-based volatility indicator inspired by the Turtle Trading system developed by Richard Dennis and William Eckhardt. It defines upper and lower boundaries based on Donchian Channel breakouts, creating a zone that helps identify trend direction and potential breakout entries. The area between the upper and lower lines represents a neutral "zone" where no clear trend is dominant.

Turtle Zone is calculated using Donchian-style channel logic:

TZ_UPPER = Highest High over N periods
TZ_LOWER = Lowest Low over N periods

When price breaks above TZ_UPPER, it signals a bullish breakout. When price breaks below TZ_LOWER, it signals a bearish breakout. Price between the two levels is in the neutral zone.

• Breakout detection — Clear signals when price exits the range
• Trend identification — Price persistently above/below midpoint indicates trend direction
• Volatility measurement — Channel width reflects recent price range
• No-trade zone — Price within the channel may indicate ranging conditions

Buy signals

• Price crosses above TZ_UPPER (bullish breakout)
• Price holds above the midpoint of TZ_UPPER and TZ_LOWER after breakout
• Channel narrows then price breaks upper boundary (volatility expansion)

Sell signals

• Price crosses below TZ_LOWER (bearish breakout)
• Price holds below the midpoint of TZ_UPPER and TZ_LOWER after breakdown
• Channel narrows then price breaks lower boundary (volatility expansion)

| Parameter | Default | Description | |-----------|---------|-------------| | Period | 20 | Number of candles for highest high / lowest low |

| Component | Description | |-----------|-------------| | TZ_UPPER(20) | Upper boundary (highest high) | | TZ_LOWER(20) | Lower boundary (lowest low) |

| Condition | Description | |-----------|-------------| | close > TZ_UPPER(20) | Price above upper boundary (bullish breakout) | | close < TZ_LOWER(20) | Price below lower boundary (bearish breakout) | | close cross_over TZ_UPPER(20) | Breakout above channel | | close cross_under TZ_LOWER(20) | Breakdown below channel |

• The original Turtle system used 20-period breakouts for entries and 10-period for exits
• Wider periods produce fewer but more significant breakout signals
• Combine with ATR-based stops for position sizing in trend-following strategies
• False breakouts are common — use volume confirmation or wait for a close beyond the level
• Works best in trending markets; avoid using in choppy or ranging conditions