Technical indicator envelopes is comprised of two moving averages. Limits move depends on the market volatility. The greater is the volatility, the greater is the move.
Upper and lower limits of the indicator denote the range of deviations. If the price is close to the upper limit, you should sell, if it’s closer to the lower – to buy.
Envelopes use is based on the fact that the prices are often getting stable and are returning back to their average level after considerable jumps caused by great pressure of the bears and the bulls when the prices are reaching extremes.
