The Basics of Moving Average Envelope Indicator.

Moving average envelope indicator create an envelope around a period’s moving average and help for find overbought and oversold conditions. This indicator based on price breakout and help for smoothly identifying the market trend. This indicator very beautifully works in trending market conditions.

Indicator Type 

Trend Follower indicator

Markets

This indicator very good work in All cash and future’s market (Please note:- this indicator not for options market.

Works Best

This indicator beautifully works in all time frame and trending market conditions.

Formula

Lines are drowned a particular percentage above the moving average and below the moving average. In Default setting envelope line drowned above 5% and below 5% and moving average period 50-day simple moving average.

this is moving average envelope indicator image
caption image for moving average envelope indicator

Parameters

Commonly Moving average indicator default is 50 days simple moving average and envelope line drowned above 5 percent and below 5 percent a simple moving average line. This is very simple and very powerful tool, especially for beginners. Because financial market beginner’s not identifying the market trend, choppy market, low strength trend and much more difficult. Moving average envelope indicator very helpful for beginners this is indicated and showing with a clear vision like market trend, trend strength, overbought and oversold conditions etc.

                     As per trader requirement, you easily change Moving average indicator settings. Because every trader’s investing time frame different like some trader invest only one week to two weeks, some trader investing monthly basis so you easily change on chart moving average envelope setting as per your requirement.

Theory

Moving average envelope indicator create a clear vision of market trend with market overbought and oversold conditions. If Price nearby moving average line its mean this is (oversold condition for uptrend and overbought conditions for a downtrend) and price nearby upper band its mean this is an overbought situation and price nearby lower band its mean this is an oversold condition. Some price range distance and Moving average envelope area distance is very high in this situation does not make any type decision because this is unsustainable trend conditions. This situation only for very smart and experienced trader, not for beginners.

THIS IS EDUCATION IMAGE FOR MOVING AVERAGE ENVELOPE INDICATOR

Interpretation

Moving average envelope very good working in trending market this indicator always confused in choppy market condition and give you start wrong signals. Very simple interpretation of this indicator if price breakout upper band its mean bullish trend start and you start buying after price near moving the average line. If price breakout lower band its mean bearish trend start and start buying after price near moving average. This indicator showing you clear-cut swing in the market so this is a very good opportunity for average-out with the trend for more and more profit. This is a very simple system for everyone and very useful for beginners in this market.

          Trading Chanakya hopes this indicator very helpful for you trading future and you able to make more and more money with using this indicator.

Math

Moving average envelope indicator envelope start any type moving average like – EMA, SMA Then the bands drawn at 5 percent above and below a moving average.

For percentage envelopes:

Upper band = moving average + x%(moving average)

Lower band = moving average – x%(moving average)

For points envelopes:

Upper band = moving average + constant

Lower band = moving average – constant

 

For better understanding watch trading Chanakya youtube video in the Hindi language.

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