Leading Technical Gold Indicators - Choose a Moving Average to Trade XAUUSD With
A xauusd trader can choose a moving average based on the gold chart time frame that he is trading: the xauusd trader might choose to use this Moving Average indicator on the minute xauusd charts, hourly xauusd charts, day xauusd charts or even weekly xauusd charts.
The xauusd trader can also choose to average the closing gold price, opening gold price or median gold price.
Moving average xauusd indicator is a commonly used indicator to measure strength of xauusd trends. The data is precise and its output as a moving line can be customized to a xauusd trader's preferences.
Using the xauusd moving average is one of the basic technical analysis method to generate xauusd buy and sell trading signals which are used to trade in the direction of the xauusd trend, since the Moving Average indicator is a lagging technical indicator and a xauusd trend following indicator - this means that it will tend to give late xauusd entry signals as opposed to leading xauusd indicators. However, as a lagging xauusd indicator it gives more accurate xauusd signals and is less prone to generating whipsaws compared to leading xauusd indicators.
XAUUSD Traders choose the moving average period to use depending on the type of xauusd trading style they do: short term xauusd trading, medium term xauusd trading and long term xauusd trading.
- Short-term xauusd trading method: uses 10 - 50 MA Period
- Medium term xauusd trading method: uses 50 - 100 MA Period
- Long term xauusd trading method: uses 100 - 200 MA Period
The gold price period in this case can be measured in minute xauusd charts, hourly xauusd charts, day xauusd charts or even weekly xauusd charts. For our example we will use 1 hour xauusd chart time frame period.
Short term xauusd moving averages are sensitive to gold price action and can identify xauusd trends signals faster than the long term moving averages. Shorter term xauusd moving averages are also more prone to whipsaws fake out signal compared to long term moving averages and a xauusd trader should choose a xauusd price period that will generate a xauusd signal early but not give too many xauusd whipsaws fakeout signals.
Long term xauusd moving averages help to avoid xauusd whipsaws, but are slower in identifying new xauusd trends and xauusd trend reversals.
Because long term moving averages calculate the average using more gold price data, it does not react to gold price changes or reverse as fast as a short term xauusd moving average and it is slow to catch the changes in the gold price trend. However, the longer term xauusd moving average is better when the xauusd trend stays in force for a longer time but may also give late xauusd signals.
The work of a xauusd trader is to find a moving average period that will identify xauusd trends as early as possible while at the same time avoiding fake out signals (also commonly known as xauusd whipsaws).