Momentum Stocks Analysis & Momentum Signals

The Moving Average Envelopes 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 Technical Analysis and Generating Signals

MA Envelope can be traded using several different rules. Main technique of generating 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 Signal

Bearish Signal

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

Sell Signal

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