What it does
An Envelope plots two bands at a fixed percentage above and below a moving average of price, such as 2 percent around a 20-period SMA. Unlike Bollinger Bands, the band width is constant and does not adapt to volatility, so the envelope simply frames how far price has strayed from its average. It is used both for mean reversion in ranges and breakout confirmation in trends.
Typedraws on the price chart
How to add it
Click Indicators (ƒx) in the header.
Search “Envelope” and click the result.
Hover its legend row and click the gear to open settings.
How traders use it
- In a sideways market, a touch of the upper band flags overbought conditions to fade and a touch of the lower band flags oversold conditions to buy, targeting the midline.
- In a trending market, price hugging or closing beyond one band signals strength; use the moving average or opposite band as a trailing reference rather than fading the move.
- Set the percentage so that historically about 90 percent of price action stays inside the bands; volatile instruments and higher timeframes need wider settings.
- Confirm band-touch fades with an oscillator such as RSI or stochastic to avoid selling strong breakouts.
Inputs
| Input | Type | Default | Range / Options |
|---|---|---|---|
| Length | number | 20 | 1–2000 |
| Upper Percentage | number | 2 | 0–50 |
| Lower Percentage | number | 2 | 0–50 |
| Method | select | Simple | Simple / Exponential / Weighted |
| Source | select | close | Close / Open / High / Low / HL2 / HLC3 / OHLC4 |
Plots & styling
| Plot | Style | Default color |
|---|---|---|
| Upper | line | #2196F3 |
| Basis | line | #FF6D00 |
| Lower | line | #2196F3 |
Every plot's color, line width and visibility can be changed on the Style tab. Precision, price-scale labels and status-line values are configurable at the bottom of the Style tab.
Tips
- Use Add to favorites in the legend menu; starred studies surface at the top of the picker.
- The legend eye toggles it off without losing your settings — handy for before/after comparisons.
- Its price-scale label can be switched off per-indicator at the bottom of the Style tab if the axis gets crowded.
Watch out for
- The fixed percentage does not adapt to changing volatility, so a setting tuned to a quiet regime gets steamrolled when volatility expands.
- In strong trends price can ride outside a band for extended periods, making naive band fades consistently wrong.