Momentum Analysis and Momentum Signals
The MA Moving Average Envelopes creates 2 lines around the price forming a channel. The upper & lower channel lines are drawn at an equidistant level above and below the MA. The distance to draw the MA Moving Average envelopes is calculated using a percentage or a number of pips.
Moving Average Envelope
Index Analysis and How to Generate Trading Signals
Moving Average Envelope can be traded using several different rules. The main method of generating signals is to use the price penetrating the upper channel or lower channel.
Bullish Signal
Price penetrating upper channel is a long buy signal.
Buy Trading Signal
Bearish Signal
Price penetrating the lower channel is a short sell trade signal.
Sell Signal
In a trending market the Moving Average points upwards in an up-trend market or downwards in a down-trend market. It is good to use the envelopes together with other indicators such as trend lines so as to confirm the trading signals generated.
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