Momentum Stock Analysis and Momentum Trading Signals

The Moving Average Envelope indicator creates two lines around the stocks 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

Stocks Trading Analysis & Generating Trading Signals

MA Envelope can be traded using several different rules. Main method of generating stock trading signals is to use the stocks price penetrating the upper channel or lower channel.

Bullish Trading Signal

Stock Price penetrating the upper channel is a long buy stock signal.

Buy Trading Signal

Bearish Trading Signal

Stock Price penetrating the lower channel is a short sell stock signal.

Sell Trading Signal

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