Volatility & Bandsdraws on the price

An SMA shifted a fixed 2.5% up and down. Crude on purpose — the width never breathes, so a touch means the move itself was unusual.

On this chart: 20-period SMA, ±2.5%.

Moving average envelopes shift a 20-period SMA up and down by a fixed percentage. They are the oldest band there is, and the fixed width is the modern reason to keep them: Bollinger and Keltner widen when volatility rises, so their touches partly reflect the regime. An envelope touch reflects only the move.

Price outside the envelope has moved more than 2.5% from its own 20-day average — the same statement in a calm January and a violent October. During volatile stretches price lives outside them; that persistence is itself the volatility reading.

A fixed yardstick has one virtue the adaptive bands lack: comparability across time. "How often does this name close 2.5% below its average, and what happened after" is a well-posed historical question — useful for calibrating what a given out-of-the-money distance has actually meant on this stock.

Like everything in this guide, these are descriptions of conditions and reference levels — context for your own decisions, not instructions to trade.