Momentum 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.

Moving Average Envelope

Technical Analysis and Generating Trade Signals

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

Bullish Signal

Price penetrating the upper channel is a long buy commodities trade signal.

Buy Signal

Bearish Signal

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

Sell Signal

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