Momentum Analysis and Momentum Signals

The MA Envelopes indicator creates two lines around the crude trading 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.

MA Envelope

Oil Analysis and How to Generate 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

Oil Price penetrating the upper channel is a long buy signal.

Buy Signal

Bearish Signal

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

Sell Signal

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