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