The Simple Moving Average Envelope consists of moving averages calculated from the underling price, shifted up and down by a fixed percentage.

When prices rise above the upper band or fall below the lower band, a change in direction may occur when the price penetrates the band after a small reversal from the opposite direction.

Remember, because only previous data is used to compute a Moving Average, it will always lags behind the actual prices. As a result, Moving Averages will not predict a change in trend, but rather follow behind the current trend. Use them for trend identification and trend following purposes and not for prediction.