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 plotted at an equi-distant level above & below the MA. The distance to plot the envelopes is calculated using a % or a number of pips.

MA Envelope

Technical Analysis and How to Generate Trading Signals

MA Envelope can be traded and transacted using several different rules. The main method of generating trade signals is to use the price testing/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 downward in a down-trend market. It's good to use the envelopes together with other indicators like trend lines so that to confirm the signals generated.

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