What is a Golden Cross or Golden Cross?

In the world of analytical trading, A Golden Cross or Golden Cross is a pattern used in technical analysis to predict bullish movements in the price of a financial asset. This pattern occurs when the short-term moving average crosses above the long-term moving average.

Although a Golden Cross may seem like a simple pattern, the reality is that behind its formation there is a series of quite complex data. Data that requires taking into account some important aspects. After all, a Golden Cross is a lagging indicator, meaning that its data representation is based on price movements that have already occurred in the past.

For example, in the case of moving averages, the average of a certain number of past prices is calculated. Due to this operation, there is always a certain delay in the signal. This implies that a Golden Cross cannot predict the future with complete accuracy. Sometimes a Golden Cross can result in a false signal, meaning that the price does not experience an upward movement as expected. Therefore, it is advisable to combine a Golden Cross with other technical indicators before basing a trade solely on this signal.

How is a Golden Cross formed?

The formation of a Golden Cross begins when a short-term moving average crosses above and above a long-term moving average on a price chart.. The short-term moving average is usually calculated using a short period, usually about 50 days. While the long-term moving average is calculated using a longer period, generally about 200 days or 4 times the short period.

Reading a Golden Cross involves interpreting the signal that is generated when the moving average cross occurs. This pattern is considered bullish and is interpreted as a sign that the financial asset is experiencing bullish momentum. Traders and investors see this as a possible opportunity to buy the asset or keep it in their portfolio.

However, it is important to note that a Golden Cross does not guarantee an immediate increase in price and that other factors should be considered before making investment decisions based solely on this pattern.

Examples of Golden Cross in Bitcoin

Bitcoin, like any financial asset, can be analyzed analytically, hence we can generate a golden cross on its price pattern. For example, a Golden Cross was formed in Bitcoin on September 15, 2021, and since then the price of Bitcoin has seen an increase of approximately 50%.

Another notable example is the Golden Cross that occurred on May 21, 2020, which marked the beginning of a considerable increase in the price of Bitcoin. After this Golden Cross, the price of Bitcoin increased by around 560%. These examples show that occasionally a Golden Cross can be a good time to enter a bullish trade.

Eg Bit2MePro You can configure moving average indicators to calculate the moment when a golden cross is generated. In the following screenshot, for example, you can see the exact moment in which this pattern is generated and how since then there has been a significant increase in the price of Bitcoin.

This is an example of the enormous potential that the tools available in Bit2Me Pro can allow you when analyzing the evolution of an asset, be it Bitcoin or Ethereum. Remember that these types of patterns can be seen in any type of asset and that, therefore, you can apply this type of analysis in those pairs where you are trading to know if you are facing a moment that may or may not be bullish, to take your decision and make the most of it.

For example, in the following image we see how several Golden Cross signals form in the ETH/USDT pair

And in each and every one of these cases we can see the same behavior: a significant average revaluation of the asset. Although always remember that these gains can retrace at a given time (as seen in the graph), this retracement generally tends to be recovered in the short or medium term. Hence, you must be attentive to different factors when operating.