Moving Average Whipsaws in Range Market

Range Markets Systems

The moving average is a useful trade technical chart indicator to trade with when a trend has formed. However the moving average indicator is prone to generating whipsaws also known as fake out signals when the price is trading in range market.

The Moving Average indicator is prone to fake outs during a ranging market because the price is volatile & keeps moving around the average, causing the moving average indicator to give signals indicating upward trend & then quickly changing to give sell signals - thus generating many whipsaw signals.

It's for this reason that the Moving average indicator should not be used to trade xauusd in a range based market.

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

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