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Thread: Moving Average Envelopes

  1. #1
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    Default Moving Average Envelopes

    Characteristic: Support and Resistance Indicator
    Parameter Defaults: MA Period 9 controls the measurement period for the average
    Percent Width 2 controls the percentage distance of the envelope from the MA
    Plots: MaEnv_T Envelope top
    MaEnv_B Envelope bottom

    Moving Average Envelopes are calculated by taking a moving average, and calculating upper and lower trading bands as a fixed percentage above and below the moving average respectively.

    These are considered to suggest extreme overbought or oversold conditions, and to identify trading ranges by the assumption that price should not deviate from the average of the underlying price element (high or low) by the percentage utilized.

    However, it is important to ensure that price is not trending otherwise false signals will be generated.

  2. #2
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    Just added information from http://www.metaquotes.net/techanalys...tors/envelopes
    envelopes is basic of River Trading System

    Envelopes Technical Indicator is formed with two Moving Averages one of which is shifted upward and another one is shifted downward. The selection of optimum relative number of band margins shifting is determined with the market volatility: the higher the latter is, the stronger the shift is.
    Envelopes define the upper and the lower margins of the price range. Signal to sell appears when the price reaches the upper margin of the band; signal to buy appears when the price reaches the lower margin.
    The logic behind envelopes is that overzealous buyers and sellers push the price to the extremes (i.e., the upper and lower bands), at which point the prices often stabilize by moving to more realistic levels. This is similar to the interpretation of Bollinger Bands.


    Upper Band = SMA(CLOSE, N)*[1+K/1000]
    Lower Band = SMA(CLOSE, N)*[1-K/1000]

    SMA Simple Moving Average;
    N averaging period;
    K/1000 the value of shifting from the average (measured in basis points).
    Trading is not a sprint but a marathon. Compounding money is a powerful thing.
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