What Is Golden Cross?

The pattern is generally viewed in three stages: first, after a downtrend, selling pressure eases; then the short-term average rises and crosses above the long-term average; in the final stage, the rally is expected to continue and the long-term average to act as support. When the crossover occurs together with high trading volume, the signal is considered stronger.

For example, when the 50-day simple moving average rises above the 200-day average on Bitcoin's daily chart, analysts and the media often announce it as a golden cross. The same logic can be applied on different timeframes and with exponential moving averages (EMA). The opposite of the pattern, in which the short-term average crosses below the long-term average, is called a death cross.

Because moving averages are calculated from past prices, the golden cross is a lagging indicator; the price has often already risen significantly before the crossover. It can produce false signals in sideways and choppy markets. For this reason, it is evaluated not as a standalone buy signal but together with other indicators and risk management.