Dow Jones Industrial Average Signal Golden Cross $DJI

Golden Cross

The golden cross occurs when a short-term moving average crosses over a major long-term moving average to the upside and is interpreted by analysts and traders as signaling a definitive upward turn in a market. Basically, the short-term average trends up faster than the long-term average, until they cross.

There are three stages to a golden cross:

A downtrend that eventually ends as selling is depleted

A second stage where the shorter moving average crosses up through the longer moving average. Finally, the continuing uptrend, hopefully leading to higher prices

Golden Cross vs. Death Cross:

The use of statistical analysis to make trading decisions is the core of technical analysis. Technical analysts use a ton of data, often in the form of charts, to analyze stocks and markets. At times, the trend lines on these charts curve and cross in ways that form shapes, often given funny names like "cup with handle," "head and shoulders," and "double top." Technical traders learn to recognize these common patterns and what they might portend for the future performance of a stock or market.

A golden cross and a death cross are exact opposites. A golden cross indicates a long-term bull market going forward, while a death cross signals a long-term bear market. Both refer to the solid confirmation of a long-term trend by the occurrence of a short-term moving average crossing over a major long-term moving average.

Speculations:

A golden cross suggests a long-term bull market going forward, while a death cross suggests a long-term bear market.

Either crossover is considered more significant when accompanied by high trading volume.

Once the crossover occurs, the long-term moving average is considered a major support level (in the case of the golden cross) or resistance level (in the instance of the death cross) for the market from that point forward.

Either cross may occur as a signal of a trend change, but they more frequently occur as a strong confirmation of a change in trend that has already taken place.

Investors/Traders use both death crosses and golden crosses to help determine when to enter and exit an asset.