Become proficient in digital currency trading with the Golden/Death Cross

Understanding short-term and long-term moving averages (MAs) is important to trading strategies, whether in cryptocurrencies or traditional assets.

When short-term and long-term moving averages cross, traders see two rare but powerful signals:

Gold and death crosses predicted the worst recession of the last century, for example, death crosses predicted bear markets in 1929, 1938, 1974 and 2008.

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A golden cross occurs when a short-term moving average crosses above a long-term moving average, signaling to traders that a strong bullish move in the price of the asset is ahead.

The Golden Cross has two main requirements:

First: the end of a sharp downtrend due to seller weakness, which means that the downward pressure on the market from sellers has eased;

Second: the short-term moving average is higher than the long-term moving average, usually the 50-period moving average and the 100-period moving average.

As shown in green above, a golden cross has occurred on the daily chart for BTC in March, indicating a strong rise from the low of $3,122 set on December 15, 2018.

Since March 12, the price has increased by 260%, from $3,859 to a price of nearly $14,000 on June 26.

death cross

Instead, a death cross is caused by long-term buyer exhaustion and an asset's short-term moving average below its long-term moving average (usually the 50-period and 200-period MA)

On March 30, 2018, BTC showed a large bearish move when the 50-day moving average fell below the 200-day moving average, signaling a 54% drop in its price from $6,850 to a bottom of $3,122 on December 15 .

Like golden crosses, death crosses are best identified with a longer time frame, as the trend takes the next day to be confirmed.

Golden and death crosses aren't always perfect, but identifying and utilizing them, along with other indicators, can be invaluable to investors in helping them trade the most volatile asset class in the world. Have to be comfortable.