Momentum Indices Technical Analysis & Momentum Trading Signals

The Moving Average Envelopes indicator creates two lines around the stock indices 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

Indices Technical Analysis and How to Generate Trading Signals

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

Bullish Trading Signal

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

Buy Trading Signal

Bearish Trading Signal

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

Sell Trading Signal

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