What is Envelopes indicator? Best Forex Trading Indicators

What is Envelopes indicator?

      Envelopes Indicator is created with two Moving Averages which one is used to shift upward and another one is used to shift downward. The range of finest virtual number of band margins shifting is resolute with the market unpredictability.

      It defines upper and lower margins of the price range. Sell signal occurs at what time the price reaches the upper margin. Buy signal occurs at what time the price reaches the lower margin.

      The logic coming behind envelopes is that overzealous buyers and sellers drive the price to the limits at which point the prices often steady by affecting to more rational levels. This is same as to the Bollinger Bands.

Calculation:

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

SMA — Simple Moving Average
N — average period
K/1000 —Value of shifting from the average