A price envelope is defined as a channel around a moving average - a ratio of 0.2 creates an envelope 20% above and below a moving average. It can be visually displayed as a band around a moving average as below.
The optimum percentage envelope is best based on the volatility of the security with more volatile stocks requiring broader envelopes.
Some traders use price envelopes as buy and sell points around a share price. They are often interpreted similarly to Bollinger Bands.
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