The Golden cross is a chart pattern that occurs when a fast moving average crosses a slow moving average upwards. Simple 50 and 200 period moving averages are generally used.
The Death Cross, on the other hand, occurs when the fast moving average crosses the slow moving average downwards.
When a Golden Cross is triggered we can hope for a start of an uptrend, because the moving average indicates the average price of a value. So when a short average is below a slow average, it means that short-term price movements are bearish compared to longer-term price movements. On the contrary for the Death Cross.
What happens when the short average crosses the longer average upwards? The short-term average price exceeds the longer-term average price. This indicates a change in market trend. From bearish to bullish. Vice versa for the Death Cross.
I analyzed this pattern a little more thoroughly asking myself if it is convenient to use simple, exponential averages or a triple EMA. All indicators that we find comfortably on Tradingview.com
I wrote an article on Bitcoin and its Death Cross on January 17th: https://www.publish0x.com/trade60/bitcoin-crossing-50-moving-average-with-200-moving-average-t-xmmldle
It turned out that using two simple averages on the daily chart we had a Death Cross on January 14 with a BTC value of 43060:
Instead, using two exponential averages, again of 50 and 200, we had a Death Cross on January 9, a little early, but with a BTC value of 41865. So less profitable:
Using instead two triple exponential averages always of 50 and 200 we had a Death Cross on November 30th with a BTC value of 56950. A big difference!
I assure you that the last one is a strategy to be tested Together with some oscillator to do shorter term trading on hourly charts or for 5 minute scalping.
I'd love to hear your views on this, especially from those who use these patterns.
For the interpretation of the levels and the construction of the excel sheet that I always publish, and my trading method, you can consult the book in Italian and English: https://www.amazon.it/dp/B09QRXJCDQ https://www.amazon.com/dp/B09RHH9PVH
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This article does not contain investment advice. Every investment and trading move carries a risk, readers should conduct their own research when making a decision.
THE OPINIONS EXPRESSED BY THE AUTHOR ARE FOR INFORMATION PURPOSES ONLY AND DO NOT CONSTITUTE FINANCIAL, INVESTMENT OR OTHER ADVICE.
Graphic: tradingview.com