What is Golden Cross? (Golden Cross or Golden Cross)

What is Golden Cross?

The Golden Cross is a bullish signal that is formed when a short-term moving average (e.g. MA50) crosses a long-term moving average (e.g. MA). MA200 ) or cross a resistance area. Since long-term indicators are usually more reliable (MA200 here), the Golden Cross shows that an uptrend may have started and this signal is better when there is an increase in trading volume ( investors are in euphoria).

Key factors

The Golden Cross is an indicator that the potential for a long-term bull run is imminent.
A Golden Cross occurs on a chart when an asset’s short-term MA crosses the asset’s long-term MA.
The left Golden Cross with the Death Cross is the death cross (the shorter moving average crosses the longer moving average).

What does the Golden Cross tell you?

There are three stages to creating a Golden Cross signal.

The first phase requires a final downtrend that will cause the price to bottom out when selling is exhausted.
In the second phase, the shorter MA crosses the larger MA to trigger a breakout and confirm a trend reversal.
The final stage is for the uptrend to resume and drive the price higher. The moving averages act as support levels on the pullback, until they cross again at the point where a Death Cross can be formed.

How to use Golden Cross in Trading

The most commonly used moving averages are the 50 and 200 period moving averages. You can choose any timeframe to define this indicator, the larger the timeframe, the stronger the uptrend will form and the longer it will last. The most common Golden Cross is a crossover of the 50-day SMA crossing the 200-day SMA.

Day traders often use smaller time periods such as the 5-period and 15-period moving averages to identify intraday “golden crosses”. The time period of the charts can also be adjusted from 1 minute to several weeks or months. Just as larger time periods generate stronger signals, the same applies to chart periods. The larger the chart time frame, the stronger and longer the Golden Cross.

You should use supporting tools such as RSI, MACD, GMMA, Fibonaci… to increase the reliability when entering orders.

Robert

Bitcoin Magazine

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