Envelope or channel lines are set parallel to the moving average (parallel to the slow MA if you use two MAs). The two channel lines must contain approximately 95% of all prices for the past two or three months on a daily chart, with only the extremes protruding outside.
Channel lines provide attractive profit targets – sell longs near the upper line and cover shorts near the lower line.
The auto envelope automatically sizes channels by calculating a standard deviation for the last n bars. It is designed to change value at most once a week (once a month on a weekly chart), making it suitable even for intra-day data (use the ‘Fixed channel size’ parameter to switch from one mode to the other).
This version is an attempt to normalize MACD in known boundsNormalized Velocity
The normalizing velocity, using by default a gradient coloring.