The Moving Average Envelopes indicator uses a percentage of the simple moving average to plot the envelope at the top and bottom of the moving average. Using the moving average values, the selected percentage of the input value is multiplied by the MA value to plot the upper and lower envelopes. Since the values of the moving average differ in different markets and currency pairs, you need to manually adjust the selected percentage for each chart. If you don’t see the envelopes on the chart, change the percentage to a smaller value until you see the envelopes.
Usually uses a breakout of the envelope price, as this can mean the beginning of a trend.
You can change the moving average and the percentage of the moving average. The screenshot shows the input percentage value of 1.25%, which is indicated as 1.25 on the EUR/USD chart. Input parameters:
- Periods: The number of bars to use in a simple moving average based on the closing price.
- Percentage: The percentage to multiply by the moving average value for building envelopes.