Momentum Analysis and Momentum Signals

The MA Envelopes indicator creates two 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 envelopes is calculated using a percentage% or a number of pips.

Moving Average Envelope

Indices Analysis & How to Generate Signals

Moving Average Envelope can be traded using several different rules. The main method of generating trade signals is to use the market price penetrating the upper channel or lower channel.

Bullish Signal

Price penetrating the upper channel is a long buy signal.

Buy Trading Signal

Bearish Signal

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

Sell Trade 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 signals generated.

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