MACD XAUUSD Whipsaws and Fake Out Signals on Bearish and Bullish Territory
Since the MACD xauusd indicator is a leading indicator which sometimes gives whipsaws, we shall look at an example of a xauusd whipsaw generated by this MACD xauusd indicator, so as to illustrate why it's always good to wait for a confirmation xauusd signal.
MACD XAUUSD Indicator XAUUSD Whipsaw - XAUUSD Whipsaws
The MACD indicator gave a buy xauusd signal, when this buy xauusd signal was generated and the MACD indicator line was still below the zero center line mark. At this point the buy xauusd signal had not been confirmed and it resulted into a xauusd whipsaw as illustrated by the moving averages which continued to move downwards.
A xauusd whipsaw signal is as a result of dramatic rise and fall in the gold price in a short time and in such a manner that skews the data used in calculating the moving averages that draw the MACD xauusd indicator data. These types of whipsaw moves are usually brought about because of some news event that can produce market noise.
Traders should have the ability to gauge a xauusd whipsaw and withstand the whipsaw; a xauusd whipsaw might result into an upswing session and then a downswing session. To minimize the risk of trading xauusd whipsaws, it's good to wait for confirmation of xauusd signals by waiting for MACD to cross above or below the zero center-line mark.
Combining MACD Crossover with Center-Line Crossover to Prevent XAUUSD Whipsaws
Buy xauusd signal - When there is a crossover, followed by a steep rise in gold price and then a center-line crossover the buy xauusd signal is confirmed.
Sell xauusd signal - When there is a crossover, followed by a steep decline in gold price and then a center-line crossover the sell xauusd signal is confirmed.
1. Buy XAUUSD Signal in Bearish Territory Whipsaw
When a buy xauusd signal is generated in a bearish territory, it might result into a xauusd whipsaw especially if it is not followed soon by a MACD center line crossover.
In the xauusd example shown below, MACD xauusd indicator gives a buy xauusd signal even though it is in bearish territory, the MACD indicator then turns downwards and starts moving down again resulting into a xauusd whipsaw. By waiting for center line crossover it is possible to avoid the whipsaw.
However, in this case there was a brief center line crossing; this xauusd whipsaw would have been hard to trade using this MACD xauusd indicator alone, that is why it is good to combine the use of MACD indicator with another xauusd technical indicator. In the xauusd example shown below MACD is combined with the moving average xauusd indicators technical analysis.
MACD XAUUSD Whipsaw - Buy XAUUSD Signal in Bearish Territory
2. Sell XAUUSD Signal in Bullish Territory Whipsaw
When a sell xauusd signal is generated in a bullish territory, it might result into a xauusd whipsaw especially if it is not followed soon by a MACD center-line crossover.
In the xauusd example shown below, the MACD xauusd indicator gives a sell xauusd signal even though it is in bullish territory, the MACD xauusd indicator then turns up and starts moving upwards again resulting into a xauusd whipsaw. By waiting for center-line crossover it is possible to avoid the xauusd whipsaw. In the xauusd example shown below by combining this MACD indicator with the Moving Average Crossover XAUUSD Strategy you would have avoided this whipsaw.
MACD XAUUSD Whipsaw - Sell XAUUSD Signal in Bullish Territory
To avoid xauusd whipsaws completely when trading the xauusd market with this MACD XAUUSD Indicator it is best to use the Center-line Crossover Signal as the Official Buy or Sell XAUUSD Signal of the MACD XAUUSD Indicator.