Envelopes Forex trading indicator, Moving Average Envelopes, Trading Bands.

Upper and lower Envelope lines are draws under and below moving average trading indicator on distance, which equal fixed percent of this moving average. Envelope trading indicator is usually used for trading, based on overbuy and oversell principles: it's sell, when the price reached upper Envelope line and buy, if price reached lower Envelope line. Moving average period and percent value are depends on price volatility.

As a rule, more high volatility is force to make more long distance from moving average to Envelope lines. In case, when excessively zealous buyers and sellers moved price to its extremely values, and lower Envelope lines it's support and resistance for change price trend and back it to its moving average or even opposite Envelope line. Envelope parameters can changed in depend on price movement and its volatility. Some analytics advised to use Envelope with period 21 and draw its lines on distance, equal 3.5 percents of its moving average. So, upper Envelope line draw in distance 3.5 percents of its moving average and lower Envelope line - minus 3.5 percents from its moving average.

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