Envelopes (Env) is one of forex technical indicator used in forex technical analysis by many traders. This Indicator if used properly can turn makes you a lot of profit.

Envelopes determine the lower and the upper margins of the price range. Two moving averages – one of which moves upward and another one moves downward -are the base of the Envelopes.

Envelopes Technical Indicator is formed with two Moving Averages one of which is shifted upward and another one is shifted downward. The selection of optimum relative number of band margins shifting is determined with the market volatility: the higher the latter is, the stronger the shift is.

Upper and lower Envelope lines are draws under and below moving average trading indicator on distance, which equal fixed percent of this moving average.

Envelope trading indicator is usually used for trading, based on overbuy and oversell principles: it’s sell, when the price reached upper Envelope line and buy, if price reached lower Envelope line. Moving average period and percent value are depends on price volatility.

The use of the Envelopes indicator is based on the fact that even after periods of high volatility provoked by overzealous sellers and buyers, they usually stabilize and return to their normal level.