Momentum Stock 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 Moving Average. The distance to draw the envelopes is calculated using a percent or a number of pips.

MA Envelope

Stock Analysis and Generating Indices Signals

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

Bullish Signal

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

Buy Indices Signal

Bearish Signal

Indices Price penetrating the lower channel is a short sell stock index trade signal.

Sell Signal

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