Momentum Stock Technical 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 MA. The distance to draw the envelopes is calculated using a percent or a number of pips.

Moving Average Envelope

Stock Technical Analysis and Generating Stock Trading Signals

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

Bullish signal

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

Buy Stock Trading Signal

Bearish signal

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

Sell Stock Trading Signal

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