HOW TO SUCCESSFULLY IM

Envelopes are a tool used by swing traders for technical analysis. They consist of moving average lines, along with upper and lower lines drawn at a certain percentage above and below the moving average. These lines help identify overbought and oversold conditions. Envelopes are based on the idea of mean reversion, where stock prices tend to deviate from the moving average but eventually return to it. The analogy of a house on a boulevard illustrates this concept. Envelopes are effective when considering a stock's typical volatility, and their accuracy can be affected by factors like the moving average's time period. However, they should be used alongside other analysis methods and indicators for informed trading decisions, as market conditions change and historical trends don't guarantee future performance.