What Is a Golden Cross?
A golden cross is a chart pattern often seen as a bullish indicator, as it refers to an asset’s short-term moving average (MA) price crossing its long-term moving average price. An MA is the average price of an asset over a set period of time.
Traders commonly use the 50-period moving average against the 200-period moving average as an indicator of the short- and long-term moving average, respectively. Hence, a swing trader may choose to use the 50- and 200-period of a five-minute chart, while a day trader may choose to use a one-hour chart instead. For example, a moving average of 50 periods on a one-hour chart represents the average price of the previous 50 hours.
A golden cross indicates that an asset’s price action has increased over a certain period and market sentiment is generally positive. A trader may choose to buy more during such an event.