Envelopes moving average

Introduction
Line simple moving average can be expanded by its environment parallel envelopes. These envelopes are rejected from the line of moving average for a certain percentage of the user to determine when prices deviated from the line of moving average for this percentage. For example, when building a 3% s envelope, we will have the upper parallel line, which is 3% above the moving average and the lower parallel line, which is 3% below the moving average.

Sample

Schedule "Cisco systems" demonstrates the 3%-s envelopes posted around the 20-day moving average price of market-based instruments. Please note, during the downward trend of the upper envelope has never been hurt, while the lower envelope has been hurt repeatedly. Movement outside the 3%-s' envelopes are essential for short-term traders who are more interested in smaller price fluctuations. Short-term analysis will consider the price outside the 3%-s' envelope as the pereprodannosti or perekuplennosti. On the other hand, when analyzing the long-term range, you can focus on prices outside the 5% or 10% s-s-envelope that surrounds the 10-week or 40-week moving average cost.

The use of graphics programs

In most graphics software, moving average envelopes can be built on the simple imposition of a price schedule. To do this, usually the first option in the parameters of the tool determines the number of periods for the moving average (the default is usually 20), while the second option sets the percentage difference between the envelope and moving average line (the default is usually 3).