The Envelopes indicator is a relatively simple in use trend indicator which can be applied on its own or paired with oscillators in a trading strategy. It can be used with any trading instrument and any timeframe, but it can also be applied with the standard settings for your convenience. Read the article to find out how you may use it to spot potential trading opportunities on the chart.
How does it work?
The Envelopes indicator is essentially a simplified version of Bollinger Bands. It is a combination of three Moving Averages (MA). Two of them are deviated to the up and down sides from the price which creates a channel that envelopes the price. The channel represents the normal trading range of a security, while the two MAs function as the markers of the overbought/oversold levels. The middle Moving Average follows the trend.
In simple words, the upper and lower lines act as the support and resistance levels and may allow the trader to take advantage of the price reversal on the chart. The middle line displays the direction of the current trend. An upward incline might be a sign of an upward trend, while a decline might be a sign of a downward trend. If the middle MA is not aiming towards any direction, it may be a sign of a flat market.
How can it be used in practice?
A buy signal is received when the middle MA is changing its direction upward.

A selling signal is observed when the middle MA is changing the direction downward.

In case of a flat market, one may use the overbought and oversold levels as the reference point. Traders may use the upper and lower MAs to spot reversals and breakouts.
In the example, several reversals are spotted when the price hits the upper or lower Moving Average and bounces back without breaking through the level. When it hits the upper or lower band, it means that it hit the extreme.

As with any other indicator, a divergence may happen and the indicator might show false signals from time to time. One may combine the Envelopes indicator with oscillators like RSI, in order to potentially receive more accurate information. Stop Loss and Take Profit levels may also help the trader manage the risks involved.
How to set it up?
To set up this indicator, simply find it in the Moving Averages sections of the Indicators tab:

Once you click on it, the settings menu will pop up. Here it is possible to choose the period of the indicator, the deviation, the source (you may choose which value will be taken in the calculation – opening price, closing price, high, low etc.) and the type of the Moving Average.
The upper and lower levels are set in a way that the price keeps within the borders around 90% of the time. This means that the trader can change the deviation according to the volatility of the price. The higher the volatility, the bigger the deviation.

The button “By default” can adjust the indicator to the default values. That is it, the indicator is ready to use!
Conclusion
The Envelopes indicator might be a good alternative to simple Moving Averages and it can provide the trader with a ready-to-use technical analysis system on its own. It can also be well combined with other indicators. However, always keep in mind that there is no 100% guarantee that this indicator will not provide false information from time to time too. You could check if this indicator fits into your trading strategy now that you have a grasp of how it works.
Farhia ibraahim
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why the acount manager always change with out knowing the trader…
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Always yours!
Hello, mem..
My name is IBRAHIM KHALIl.
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Thank you for your feedback. It’s a pity if trading turned out to be unprofitable for you. Instruments on our platform implement technical analysis and overall market alertness. Please, note that intuitive trading leads to unsatisfactory results. That is why it’s important to analyze the chart.
You are always welcome Ibrahim 🙂
Good information.
Hello Dear, thank you so much for your feedback.
Ok but……
Hey, can you specify your question?
Hi there, thanks for the info…
Only one question
Is it true that you are manipulating trades???…
Hello! No sir, we do not. The graph can go up or down any moment depending on the market condition. We do not manipulate the charts. If you have some issues, please write to us at support@iqoption.com.
Thanks, so much
Hello Dear, thank you so much for your feedback.
Thanks for this information it would help me but you can also add suitable settings that would go for different types of market like ranging, trending etc and educate us on how to use other tools. Thank you.
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We try to do our best and to provide you with the right information. We will pass your comments to our content writers 🙂
how to set up the envelopes indicator?
Hey hi,
You can find it in the moving average tab in indicators section, please check out the article, it has all relevant information about it 🙂
i found this information so useful in need keep updating..
Thank you so much 🙂
i would wish to understand does your provider systematically being conducted by IBM or you follow indicators from IBM too, which you then provide to us for us to trade?
Hey hi Felix, how are you? Can you please rephrase your question, we could not understand it completely 🙂
Thanks for ur valuable suggestion .
Hello Dear, thank you so much for your feedback.
We try to do our best and to provide you with the right information.
how to set up the envelopes indicator?
Hi, Ahmed! 🙂 What indicator are you referring to?
Thank you so much telling me how can I use Bollinger bands.
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We try to do our best and to provide you with the right information. Let us know if you have something to add. Good day.
Thank you. It’s so helpful
Hello Dear, thank you so much for your feedback.
We try to do our best and to provide you with the right information. Let us know if you have something to add. Good day.
This indicator can be used only for the FOREX market, if not what can be the settings for Binary options and digital options??
I’m new for this trade so can u guide me more then that I can try for trade
Hey! Do you want to know more about this indicator or trading itself?
Did you go through this article 🙂 ?
Hi
Hey hi 🙂 How can we assist you?
Hi Adil , thank for the info ,I have been a fan of envelopes , would be possible to have setting for 1 min
Hey hi! How are you? It can be used with any trading instrument with any time frame 🙂 You are always welcome 🙂
Thank testing the strategy , good results so far
We wish you best of luck!
My Name Hassan Mumin, Thanks for your support.
Hello Dear, thank you so much for your feedback.
We try to do our best and to provide you with the right information.
it doesn’t works on options. i tried to implement it
I need help for use how to tried P/ s help me
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IQ Option, is it reliable platform for Trading? If your answer is yes. how can i proved it.
thank you very much for sharing this one, i will try for this.
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