Envelope
A trading band composed of two moving averages, one of which is shifting upwards and the other shifting downwards. Investopedia Says:
These trading bands are used by technical analysts to define a stock's upper and lower boundaries. Signals to sell occur when the stock price reaches the upper band, and buy signals are generated when the price reaches the lower band.
The reasoning behind the sell and buy signals is that stock prices tend to bounce off the bands. Even though buyers and sellers will temporarily pressure a stock's price to its extremes, it should re-stabilize to more realistic levels found within the envelope. Related Terms:
Bollinger Bands
Chartist
Consolidation
Gann Angles
Moving Average
Technical Analysis |