Momentum Stock Indices Technical Analysis & Momentum Trading Signals

The Moving Average Envelope indicator creates two lines around the stock index 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

Stock Indices Technical Analysis & Generating Indices Signals

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

Bullish Trading Signal

Indices Price penetrating the upper channel is a long buy stock index trade signal.

Buy Indices Signal

Bearish Trading Signal

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

Sell Stock Indices Signal

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