Forex Technical Analysis Articles - Moving Average Based Indicators - Moving Average Envelope

Technical Analysis

1. Introduction

2. Construction and Interpretation

3. Generating Signals

An earlier article described the uses, advantages and disadvantages of using moving averages. The Moving Average Envelope Indicator adds an extra feature to the regular moving average analysis.

They can be used as bands around price action that signify overbought and oversold levels and can also be used as price targets.

The Moving Average Envelope indicator seen in VT Trader.

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Table of Contents

1. Introduction
Here we explain some of the basic information that the MACD indicator provides.

2. Construction and Interpretation
The MACD is an oscillator that looks at the difference between two exponential moving averages. When plotting a MACD indicator two lines show up, the MACD line and the signal line.

3. Generating Signals
MACD moves up and down around a centerline at zero. The centerline is the neutral measurement and the oscillation up and down by the MACD lines represent if the currency pair is overextended.