Momentum Stocks Technical Analysis and Momentum Trading Signals

The Moving Average Envelopes 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

Stock Technical Analysis and Generating Stocks 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 Stocks Trading Signal

Stocks Price penetrating the upper channel is a long buy stocks trade signal.

Buy Stock Signal

Bearish Stocks Trading Signal

Stocks Price penetrating the lower channel is a short sell stocks trade signal.

Sell Stock Signal

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