How to use the envelope strategy indicator?

Question

Arturo · Accepted Answer

To use envelope indicators, you must select a base line, such as a moving average, and a percentage deviation to determine the distance of the envelope lines from the base line. You can choose a fixed or dynamic percentage deviation depending on the volatility of the market. The higher the percentage deviation, the wider the envelope and the less likely the price will touch the envelope lines. Conversely, a lower percentage deviation leads to a narrower envelope and a higher probability of the price crossing the envelope lines. Envelope indicators can be employed to identify trends, overbought and oversold conditions, as well as potential reversal points. When within the envelope, it indicates a stable trend; when breaking above or below, it signals a possible trend change or strong momentum. When reaching or exceeding the upper envelope line, it suggests that the market is overbought and may reverse or consolidate; when reaching or falling below the lower envelope line, it implies that the market is oversold and may bounce or stabilize. Additionally, when crossing from one side to another, it signals a potential reversal point which can be confirmed with oscillators or candlestick patterns.

How to use the envelope strategy indicator?

1 Answer

1 Answer

How to use the envelope strategy indicator?

1 Answer

1 Answer

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