Nolte's Envelope is an envelope with a dynamic deviation that adjusts according to the trend strength. It helps to filter between ranging and trending markets. While the markets are trending, the upper and lower envelope levels combine to create a single median moving average (HL/2). As the trend begins to weaken, the upper envelope level begins to expand upwards and the lower envelope level begins to expand lower.
Some of the characteristics include:
- Quick exit from losing trades.
- Follows the trend for greater profits.
- Reduces false signals in ranging markets.
The following are inputs available in the application:
- Deviation – set the maximum deviation.
- STP – adjust the sensitivity to the trend.
- Power – change the envelopes rate of expansion.
- MA Periods – set the period for the moving average.
- MA Method – set the method for the moving average (0=simple, 1=exponential, 2=smoothed, 3=weighted).
- Shift – shift indicator forward.