Envelopes are used to indicate the trading range of a given market above and below an average price. Basically, moving average envelopes or trading bands 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 … [Read more...]
Envelopes in Stock Trading : Concept
Envelopes refer to moving average bands and channels, which consist of a middle and two outer bands. Envelope theory states that prices are most likely to remain within the boundaries of the envelope. When prices go outside the envelope this can indicate an overbought/oversold situation. An envelope is generally two moving averages, one adjusted to be above price, the other … [Read more...]