Momentum Analysis & Momentum Signals

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

MA Envelope

Technical Analysis and How to Generate Signals

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

Bullish Signal

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

Buy Trade Signal

Bearish Signal

Price penetrating the lower channel is a short sell signal.

Sell Signal

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

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