Section: 3 Market Structure

Sub Section: 3 Envelope

Envelope is plotted above and below a moving average using a specified percentage as a shift.  The envelope indicator is used to create signals for buying and selling, and the percentage to be used for calculating the envelopes is specified by the user.  This percentage should depend on the volatility of the market (the higher the market volatility, the higher the percentage should be). A sell signal is generated when the security reaches the upper band whereas a buy signal is generated at the lower band.