Momentum Analysis and Momentum Signals

The Moving Average Envelope indicator creates two lines around the price forming a channel. The upper and lower channel lines are drawn at an equidistant level above and below the MA. The distance to draw the envelopes is calculated using a percent or a number of pips.

Moving Average Envelope

Forex Technical Analysis and Generating Signals

MA Envelope can be traded using several different forex rules. The main method of generating signals is to use the price penetrating the upper channel or lower channel.

Bullish Signal

Forex Price penetrating the upper channel is a long buy signal.

Buy Signal

Bearish Signal

Forex Price penetrating the lower channel is a short sell signal.

Sell Trading Signal

In a trending market the MA points upwards in an up trend market or downward in a down trending market. It is good to use the envelopes together with other MT5 Indicators such as trendlines so as to confirm the signals generated.