The usefulness of a single moving average can be enhanced by surrounding it with envelopes. Percentage envelopes can be used to help determine when a market has gotten overextended in either direction. In other words, they tell us when prices have strayed too far from their moving average line. In order to do this, the envelopes are placed at fixed percentages above and below the average. Shorter term traders, for example, often use 3% envelopes around a simple 21 day moving average. When prices reach one of the envelopes (3% from the average), the short term trend is considered to be overextended. For long range analysis, some possible combinations include 5% envelopes around a 10 week average or a 10% envelope around a 40 week average. (See Figures 9.8a-b.)