Oil MA Whipsaws in Range Trade Market

Range Markets Oil Systems Strategies

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

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

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

Ranging Market and Whipsaws in Crude Oil Moving Average Technical Indicator - How to Trade Oil in a Range Market

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