the hAndbook of technIcAl AnAlysIsSee Figure 12.3.Central Value
An envelope comprises an upper and lower band, which may or may not be based
on some central value. Popular envelopes or bands that are based on some form
of central value are:
■ (^) Bollinger Bands: Simple moving average (SMA) of closing prices
■ (^) Fixed Percentage Bands: Any form of moving average
■ (^) Fixed Value Bands: Any form of moving average
■ (^) Keltner Bands: 10‐period SMA of typical price, that is (H +L+C)/3; some mod-
ern variations include the use of a 20‐day period or even an exponential mov-
ing average (EMA) as its central value
■ (^) STARC Bands: 6‐period SMA of closing prices
■ (^) ATR Bands: Any form of moving average
Popular bands that are not based on some form of central value are:
■ (^) Price Channels and Donchian Channels
■ (^) Darvas Boxes
Some examples of central value are:
■ (^) Moving Average of Closing Prices
■ (^) Moving Average of Mid Prices
■ (^) Moving Average of Typical Prices
■ (^) Moving Average of Weighted Close Prices
■ (^) Regression Line
Figure 12.3 Volatility on the Daily Chart of PowerShares DB U.S. Dollar Index
Bullish Fund.
Courtesy of Stockcharts.com