The SMA Envelopes are plotted as two lines that are offset from the SMA by a certain percentage. The upper line is typically plotted a few percentage points above the SMA, while the lower line is plotted a few percentage points below the SMA. Traders may use them to identify potential buy or sell signals when the price of an asset moves above or below the upper or lower envelope lines. For example, a trader might enter a long position when the price of an asset moves above the upper envelope line and exit the position when the price falls below the SMA. The SMA Envelopes can also be used to identify the strength of a trend. A strong uptrend is indicated when the price stays above the upper envelope line for an extended period. In contrast, a strong downtrend is indicated when the price remains below the lower envelope line for an extended period.
