A moving average with upper and lower bands set a fixed percent away, 2.5% around a 20-bar SMA by default.
Overview
The Moving Average Envelope draws a basis moving average with two bands, one above and one below, at a fixed percentage distance. By default the basis is a 20-bar SMA of the close and the bands sit 2.5% away.
Colors follow direction: bullish and bearish colors, with a gray basis.
How it works
Upper band = basis x (1 + percent / 100). Lower band = basis x (1 - percent / 100). The basis can be SMA, EMA, WMA, RMA (SMMA), HMA or VWMA.
Unlike Bollinger Bands, the width does not change with volatility; it is always the same share of the basis.
How to use it
- Some traders watch touches of the bands as signs price is stretched from its average.
- Use a close outside the band to spot strong moves.
- Use the basis as the trend line and the bands as a range around it.
- Adjust the percent to fit how much the symbol usually moves.
These are ways some traders read it, for learning. They are not trade signals.
Settings
| Setting | Default |
|---|---|
| Settings | |
| MA TypeMoving average type used as the envelope basis.Options: SMA, EMA, WMA, RMA (SMMA), HMA, VWMA | SMA |
| LengthNumber of bars in the basis moving average. | 20 |
| SourcePrice series the basis moving average is calculated on.Options: Close, Open, High, Low, HL2, HLC3, OHLC4, HLCC4 | Close |
| PercentEnvelope offset as a percentage of the basis. Upper = basis × (1 + percent / 100), lower = basis × (1 − percent / 100). | 2.5 |
| Style | |
| BullishColor of the lower band and of the basis while price holds above it. | #089981 |
| BearishColor of the upper band and of the basis while price sits below it. | #f23645 |
| BasisColor of the basis line while price sits exactly on it. | #787b86 |
Alerts
You can alert on its line crossing a value or the candle close (from the chart's + menu); checked while ZoroCharts is open.
Notes and limits
- Works on any symbol and timeframe; it only needs candle data.
- A fixed percent may be too wide on quiet symbols and too narrow on volatile ones.
Education only. Not financial advice. Indicators mark what happened on the chart; they do not predict what price will do. Trading futures, forex, crypto and other markets carries a high level of risk and may not be suitable for everyone.