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Moving Average Whipsaws Fake Outs in Range-Bound Sideways Market

Range Markets Systems

The moving average is a helpful tool for trading when the price is generally going up or down. But, the moving average can give false signals when the price is bouncing around in a limited range.

The Moving Average indicator frequently generates false signals (fake outs) when the market is characterized by sideways consolidation because price action becomes erratic, oscillating closely around the average value. This causes the MA technical indicator to issue signals suggesting an uptrend, only to quickly switch and provide sell signals shortly thereafter, resulting in numerous 'whipsaw' signals.

For this reason, the MA indicator is not suitable for trading XAUUSD in a market that is moving sideways.

How to Trade XAUUSD on a Range Market - Moving Average Gold Whipsaws Fake Outs in Range Markets Gold Strategy

Ranging Market and Whipsaws in Gold Moving Average - How to Trade XAUUSD on a Range Market

This is why it's best to combine this moving average indicator with other indicators when generating signals to trade with.

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