Momentum Forex Technical Analysis and Momentum Trading Signals

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

Moving Average Envelope

Forex Technical Analysis and Generating Forex Trading Signals

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

Bullish signal

Price penetrating the upper channel is a long buy signal.

Buy 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 downwards in a down trending market. It is good to use the envelopes together with other technical indicators such as trend lines so as to confirm the signals generated.