ATR-Adjusted Envelopes for Measuring Price Deviation

Summary

This document describes a modified Envelopes indicator that measures how far price deviates from a moving average. It presents the usual Envelopes channel as an inner band, then uses the symbol's average true range to form additional upper and lower boundaries around that channel. The display is described as a cloud with separate colors for the Envelopes and ATR-based borders.

The concept combines a moving-average reference with a volatility measure, so the displayed deviation bands account for the instrument's recent range. The document notes that the implementation relies on helper classes from an external smoothing library and says those classes are discussed in a separate article. It gives no parameter settings, trading rules, chart-based evaluation, or performance evidence; therefore it explains the indicator's construction and visual meaning, but does not establish how it should be traded or whether it improves decisions.

Key ideas

• The indicator measures price deviation relative to a moving average using an Envelopes channel.
• ATR supplies a volatility-based adjustment that creates outer boundaries around the channel.
• The plotted cloud distinguishes the Envelopes channel from the ATR-derived borders.
• The description provides no signal rules or performance evidence, so trading effectiveness remains untested here.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.