ENVELOPES envelope curve index

The envelope technical indicator is composed of two moving averages, one moving upwards and the other moving downwards. The choice of which associated number of channel margins moves is determined by the market’s rate of change: the higher the market rate of change, the stronger the channel margins change.

The envelope index defines the upper and lower margins of the price range. When the price reaches the margin at the upper end of the channel, the sell signal appears; when the price reaches the margin at the lower end of the channel, the buy signal appears.

The logic behind the envelope indicator is that over-enthusiastic buyers and sellers push prices to extremes (upper channel or lower channel). At these points, prices usually become more stable by moving to a relatively realistic level. This is quite similar to the explanation of the Bollinger Channel indicator.

Calculation method:

Upper channel=SMA(CLOSE,N)[1+K/1000], lower channel=SMA(CLOSE,N)[1-K/1000]

Notes:
SMA simple moving average;
The value of N average time period;
The value of K/1000 change from the average value (measured based on the basic point).
ENVELOPES envelope curve index