Envelope
An envelope is comprised of two moving averages. One moving average is shifted upward and the second moving average is shifted downward. Envelopes define the upper and lower boundaries of a security's normal trading range. A sell signal is generated when the security reaches the upper band whereas a buy signal is generated at the lower band. The optimum percentage shift depends on the volatility of the security - the more volatile, the larger the percentage.
The logic behind envelopes is that overzealous buyers and sellers push the price to the extremes (i.e., the upper and lower bands), at which point the prices often stabilize by moving to more realistic levels. This is similar to the interpretation of Bollinger Bands.
Envelope(Parameters)
- Range. Any range of data, e.g. array of Close, Low prices, Volume, etc.
- Output range. The cell reference for the range of output data.
- Period. Number of values used for calculation.
- Percent. Number of values used when calculating the percent rate-of-change of the moving average.
- Method. Choose the moving average calculation method (i.e., simple, exponential, weighted).
Envelope(Syntax)
Envelope(METHOD;RANGE;PERIOD;PERCENT;DIRECTION)
Example
=Envelope("L";A1:A10;10;5;0)
|
