Golden Cross in Stocks Meaning and How Traders Use It
Either crossover is considered more significant when accompanied by high trading volume. The short-term moving average crosses from above the long-term moving average in a death cross and crosses from below in a golden cross. It’s important to understand that the death cross is the opposite of the golden cross. While the golden cross signals a bullish market, the death cross occurs when the short-term moving average crosses below the long-term moving average, indicating bearish momentum. A golden cross indicates that a long-term bull market is looming while a death cross signals a long-term bear market ahead.
Golden Cross vs. Death Cross: What’s the Difference?
Understanding both helps you recognize when sentiment is shifting in either direction. Plans are self-directed purchases and are not investment recommendations. Plans are created using defined, objective criteria based on generally accepted investment theory; they are not based on your needs or risk profile. You are responsible for establishing and maintaining allocations among assets within your Plan.
Similarly, the death cross is the opposite version that signals a bearish trend about to happen. Tesla’s stock formed a golden cross in January 2025, with its 50-day moving average surpassing the 200-day moving average. This bullish signal emerged after a period of decline, suggesting a potential reversal. Analysts pointed to factors such as anticipated strong vehicle deliveries and upcoming product unveilings as catalysts for this positive movement. In March 2025, Boeing’s stock exhibited a golden cross as its 50-day moving average crossed above the 200-day moving average. This technical indicator suggested a bullish momentum, coinciding with positive remarks from the company’s CFO and new aircraft orders.
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- Traders take advantage of this by simply buying a stock that just had a golden cross.
- Lastly, it’s important to note that since traders usually pay close attention to the appearance of a golden cross, this can become kind of a self-fulfilling prophecy.
- The short-term moving average crosses from above the long-term moving average in a death cross and crosses from below in a golden cross.
- The golden cross is not limited to stocks; it can be applied to a range of assets, including cryptocurrencies, commodities, and even forex markets.
Real-world examples of the golden cross
An investor could potentially lose all or more of their initial investment. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success. Finally, the uptrend finishes when the death cross happens. As expected, the death cross is the opposite of a golden cross. Notice that the price range of the candlesticks made a significant jump when the downward trend bottomed out and turned into an uptrend.
All indicators are lagging, which means the data used to form the charts has already occurred. As such, they indicate past performance so they are reactive rather than proactive. This means that no indicator can truly predict the future. Many times, an observed Defensive stocks definition golden cross produces a false signal. Prices gradually increased over time, creating an upward trend in the moving 50-day average.
How to use the golden cross in your trading strategy
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Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Historical or hypothetical performance results are presented for illustrative purposes only. The golden cross is often used as a confirmation of a broader trend reversal.
Following this crossover, Boeing’s stock experienced its largest one-day gain since 2023, closing at $172.62. Because a golden cross indicates a bullish trend, many investors hail it as a strong buy sign. Day traders commonly use smaller periods like the five-day and 15-day moving averages to trade intra-day golden cross breakouts. Some traders might use different periodic increments, like weeks or months, depending on their trading preferences and what they believe works for them. In March 2019, Apple (AAPL) experienced a golden cross when its 50-day MA crossed above its 200-day MA, signaling strong bullish momentum. Following this crossover, AAPL’s stock price continued to rise significantly, confirming the pattern’s effectiveness as a trend indicator.
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While 50 days and 200 days are the typical periods for determining crossover patterns, some investors use shorter windows of time. For example, short-term traders may examine the 10-day and 50-day moving averages. To trade intra-day golden cross breakouts, day traders commonly use smaller time frames, such as the five and 15-day moving averages. Spotting a golden cross on these time frames may work for you. Combining them with pattern volume and price action will give you the greatest edge. Whereas the golden cross signals a bullish momentum, the death cross can mark the start of a bearish trend, signaling the falling of prices and strong selling dominance.
Noise in data:
Despite its apparent predictive power in forecasting prior large bull markets, golden crosses also regularly fail to manifest. Therefore, other signals and indicators (especially leading indicators) should always be used to confirm a golden cross. The image below uses a 50-day and a 200-day moving average. The 50-day moving average trended down over several trading periods, finally reaching a price level the market couldn’t support.
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The golden cross is a clear sign that the market is getting ready for a bullish turn. The bulls (buyers) are getting more action and everyone is more optimistic about the potential growth of the asset in question. Both patterns should be used alongside volume analysis, RSI, and support/resistance levels for better accuracy. While the golden cross is a powerful tool, traders often use it alongside other indicators to make well-informed decisions.
In the same way, the more common periods used for comparison are the 50-day moving average versus the 200-day moving average. Traders can set their desired timeframes to compare, like a 10-day moving average (MA) compared to a 50-day one, or a 100-day MA compared to a 200-day one. In this guide, we’ll break down what a golden cross is, how it forms, real examples from the market, and whether it actually works. You’ll also learn common mistakes to avoid and how to trade using this pattern safely. Investment advisory services for Treasury Accounts provided by Public Advisors and brokerage services provided by Public Investing.
