Envelope (Env) - Built-in Indicator Guide

Plots a moving-average basis (SMA or EMA) with upper and lower bands set at a fixed percentage from the basis.

Overview

The Envelope indicator overlays a moving-average basis on the main chart and adds two symmetric bands at a constant percentage distance. By default the basis is a simple moving average of closing prices; enabling the exponential option switches the basis to an exponential moving average. The percent parameter controls how far the upper and lower bands are from the basis.

Because the bands are calculated relative to the moving average, their absolute width grows as the basis rises and shrinks as it falls. The chart displays the basis in red, the upper and lower bands in blue, and a translucent aqua fill between the bands. It is meant for observing percentage deviations of the selected source from its recent average.

How it works

1. Read the settings: length, percent, src, and exponential.
2. If exponential is true, compute the basis with Ema.new(src, length)[0]; otherwise use Sma.new(src, length)[0].
3. The [0] index reads the current bar value from the returned series object.
4. Convert the percentage to a decimal factor: k = percent / 100.0.
5. Compute the upper band as basis * (1 + k) and the lower band as basis * (1 - k).
6. Return the tuple (lower, basis, upper, plot.Fill()) so the plot decorators draw the lines and fill in the correct order.

Mathematical model

Logic flow

flowchart TD
    A["Start bar computation"]
    B["Read length, percent, src, exponential"]
    C{"exponential?"}
    D["basis = Ema.new(src, length)[0]"]
    E["basis = Sma.new(src, length)[0]"]
    F["k = percent / 100.0"]
    G["upper = basis * (1 + k)"]
    H["lower = basis * (1 - k)"]
    I["Return lower, basis, upper, plot.Fill()"]
    A --> B
    B --> C
    C -->|"true"| D
    C -->|"false"| E
    D --> F
    E --> F
    F --> G
    G --> H
    H --> I

Parameters

Code walkthrough

Indicator and parameter declarations

Lines 6-10 of Envelope.indie5:

@indicator('Env', overlay_main_pane=True)  # Envelope
@param.int('length', default=20, min=1)
@param.float('percent', default=10.0)
@param.source('src', default=source.CLOSE, title='Source')
@param.bool('exponential', default=False)

These decorators register the script as an overlay indicator named Env and generate the settings UI: length, percent, src, and exponential. The overlay_main_pane=True flag places the output directly on the main chart pane.

Plot output contract

Lines 11-14 of Envelope.indie5:

@plot.line('lower', color=color.BLUE, title='Lower')
@plot.line('basis', color=color.RED, title='Basis')
@plot.line('upper', color=color.BLUE, title='Upper')
@plot.fill('lower', 'upper', color=color.AQUA(0.05), title='Background')

Each @plot.line decorator declares one series to be plotted: lower, basis, and upper, with their colors and titles. The @plot.fill decorator declares a translucent aqua fill between the lower and upper plots. The value returned from Main must match the order of these decorators.

Choosing the moving-average basis

Lines 15-20 of Envelope.indie5:

def Main(self, length, percent, src, exponential):
    basis = 0.0
    if exponential:
        basis = Ema.new(src, length)[0]
    else:
        basis = Sma.new(src, length)[0]

Main receives the parameter values. basis is initialized to 0.0, then assigned inside an if/else branch. Ema.new and Sma.new return series objects; indexing with [0] reads the current bar’s value. The exponential flag selects the EMA path when enabled, otherwise the SMA path.

Band calculation and output

Lines 21-24 of Envelope.indie5:

    k = percent / 100.0
    upper = basis * (1 + k)
    lower = basis * (1 - k)
    return lower, basis, upper, plot.Fill()

The percentage is converted to a decimal factor k. The upper and lower bands are symmetric multiples of the basis. Returning plot.Fill() as the fourth value pairs with the @plot.fill decorator, drawing the filled area between the lower and upper bands.

Reading the chart

Red line (basis): the SMA or EMA of the selected source. Blue lines (upper and lower): the basis shifted up and down by percent. Aqua translucent fill: the area between the lower and upper bands. When the visible source value is outside the blue lines, it is more than percent away from the current moving-average basis. The absolute distance between the bands is 2 * basis * percent / 100, so it changes with the level of the basis itself.

Implementation notes

• basis = 0.0 is a fallback initialization; both branches of the if/else assign a real value.
• Ema.new and Sma.new create series objects; [0] is the current bar, and previous bars would be accessible as [1], [2], etc.
• The bands are not volatility-based; they scale linearly with the basis level.
• The default exponential value is false, so the indicator uses a simple moving average unless the user changes the setting.

FAQ

How do I make the envelope use an exponential moving average?

Enable the exponential boolean setting. When it is true, Main calls Ema.new(src, length) instead of Sma.new(src, length) for the basis.

What does percent mean exactly?

It is the one-sided band distance as a percentage of the basis. At 10.0, upper equals basis * 1.10 and lower equals basis * 0.90.

Can I apply the envelope to another data series?

Yes, use the Source setting, which corresponds to the src parameter. The default is close, and the entire calculation runs on whatever source you select.

Full source code

Indie Script v5, the built-in indicator as shipped with TakeProfit. Add it from the indicators menu or copy the code into the platform’s script editor.

# indie:lang_version = 5
from indie import indicator, param, source, plot, color
from indie.algorithms import Ema, Sma


@indicator('Env', overlay_main_pane=True)  # Envelope
@param.int('length', default=20, min=1)
@param.float('percent', default=10.0)
@param.source('src', default=source.CLOSE, title='Source')
@param.bool('exponential', default=False)
@plot.line('lower', color=color.BLUE, title='Lower')
@plot.line('basis', color=color.RED, title='Basis')
@plot.line('upper', color=color.BLUE, title='Upper')
@plot.fill('lower', 'upper', color=color.AQUA(0.05), title='Background')
def Main(self, length, percent, src, exponential):
    basis = 0.0
    if exponential:
        basis = Ema.new(src, length)[0]
    else:
        basis = Sma.new(src, length)[0]
    k = percent / 100.0
    upper = basis * (1 + k)
    lower = basis * (1 - k)
    return lower, basis, upper, plot.Fill()