Momentum Analysis and Momentum Signals

The Moving Average Envelope indicator makes two lines around the price, creating a channel. The top and bottom lines of the channel are drawn at the same distance above and below the MA. The space between the lines is based on a percentage or a number of pips.

MA Envelope

Technical Analysis and How to Generate Trading Signals

The Moving Average (MA) Envelope strategy can be traded using various methodologies. A primary approach involves generating trade signals based on price testing or breaking the upper or lower channels.

Bullish Signal

When the Price goes above the top line, it is a signal to purchase.

Buy Signal

Bearish Signal

When price goes below the lower band, it is a sell signal.

Sell Signal

In a trending market the MA points upwards in an uptrend market or downward in a down-trend market. It is good to use the envelopes together with other technical indicators like trend lines so that to confirm the signals generated.

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