An envelope with 2 percent bands around a 20 period average simply asks whether price is unusually extended. Unlike bollinger-bands, the width is fixed rather than derived from volatility, so the bands do not adapt when conditions change.
That rigidity is both the weakness and, occasionally, the point: a fixed envelope makes it obvious when volatility regimes shift, because price starts spending far more or far less time outside the bands.
Envelopes are used for mean-reversion entries and for judging when a trend has become overextended. They say nothing about direction, and in a strong trend price can ride outside the upper band for a long time, so fading them without a stop is a reliable way to lose money.
Related: bollinger-bands, keltner-channel, mean-reversion, simple-moving-average, percent-b