Envelopes is a free Metatrader 4 Forex indicator that draws the envelopes trading channel on the chart and reveals the real trend.
The indicator can create awesome trade opportunities.
The indicator appears in the main MT4 chart window as a colored yellow/red envelope channel.
Envelopes can be used in multiple ways.
Buy and Sell Example
- Open a buy trade whenever the candlestick touches the lower red envelopes band and the envelopes bands are rising.
- Open a sell trade whenever the candlestick touches the upper yellow envelopes band and the envelopes bands are falling.
The Envelopes indicator can be used for both trade entry and exit, or as an additional confirmation filter for other strategies and systems.
The indicator works equally well on all currency pairs (majors, minors and exotic) and shows promising results if used correctly.
Free Download
Download the “Envelopes.mq4” indicator for MT4
Indicator Chart (EUR/USD M15)
The picture below shows the Envelopes mt4 indicator in action on the trading chart.
Tips:
Feel free to use your own favorite trade entry, stop loss and take profit strategy to trade with the Envelopes Forex indicator.
As always, trade in agreement with the overall trend and practice on a demo account first until you fully understand this indicator.
Please note that even the best trading indicator cannot yield a 100% win rate over long periods.
Indicator Specifications & Inputs:
Trading Platform: Developed for Metatrader 4 (MT4)
Currency pairs: Works for any pair
Time frames: Works for any time frame
Trade Style: Works for scalping, day trading and swing trading
Input Parameters: Variable (inputs tab), color settings & style
Indicator type: Envelopes
Does the indicator repaint? No.
Envelope + Sibbet Demand Index Divergence MT4 Intraday Strategy
Introduction
This intraday strategy combines the Envelopes Indicator and the Sibbet Demand Index Divergence Indicator on the MT4 platform to identify high-probability reversal points and trend shifts.
The Envelopes Indicator helps detect overbought and oversold levels across all timeframes.
The Sibbet Demand Index Divergence Indicator identifies divergences between price action and demand strength, providing insights into potential trend reversals.
Buy Entry Rules
- Price touches or breaks below the lower envelope line of the Envelopes Indicator, indicating an oversold condition.
- The Sibbet Demand Index Divergence Indicator turns back above the zero level (green color).
- Enter a buy position at the close of the candle that confirms both conditions.
- Stop Loss: Place below the recent swing low or a fixed number of pips, depending on the currency pair’s volatility.
- Take Profit: Set at a risk-to-reward ratio of 1:2 or at the next significant resistance level.
Sell Entry Rules
- Price touches or breaks above the upper envelope line of the Envelopes Indicator, indicating an overbought condition.
- The Sibbet Demand Index Divergence Indicator crosses back below 0 (red color).
- Enter a sell position at the close of the candle that confirms both conditions.
- Stop Loss: Place above the recent swing high or a fixed number of pips, depending on the currency pair’s volatility.
- Take Profit: Set at a risk-to-reward ratio of 1:2 or at the next significant support level.
Advantages
- Helps identify precise reversal points using divergence and overbought/oversold conditions.
- Allows traders to scale out of positions for partial profits, reducing risk.
- Suitable for intraday trading across multiple pairs and timeframes.
- Combining two indicators increases the probability of high-quality trades compared to using a single indicator.
Drawbacks
- Requires patience, as setups may not appear frequently in low-volatility markets.
- Partial exits may lead to missed larger moves if not managed carefully.
Example Case Study 1 — EUR/USD, 15m
During a period of consolidation, the price touched the lower envelope line, indicating an oversold condition.
Simultaneously, the Sibbet Demand Index Divergence Indicator showed a green bullish divergence, suggesting increasing demand.
A buy position was entered at the close of the confirming candle.
The price moved upward, hitting the take profit target at the next resistance level, resulting in a successful trade.
Example Case Study 2 — GBP/USD, 5m
After a strong upward movement, the price touched the upper envelope line, indicating an overbought condition.
The Sibbet Demand Index Divergence Indicator then showed a red bearish divergence below zero, suggesting decreasing demand.
A sell position was entered at the close of the confirming candle.
The price declined, reaching the take profit target at the next support level, yielding a profitable trade.
Strategy Tips
- Look for confluence with support and resistance levels on higher timeframes to increase accuracy.
- Set alerts on MT4 for envelope touches or divergence signals to avoid missing intraday opportunities.
- Manage risk by limiting the total number of trades per session to prevent overtrading.
- Consider adjusting the envelope period slightly based on market volatility for different currency pairs.
