Technical Analysis: What is a golden cross in crypto?

If you’ve ever tried to learn about trading and in particular technical analysis, you’ve heard of technical indicators, right?

Today we are going to lift the veil on the mysterious “Golden Cross” together. Let’s go!

Disclaimer: Our content is intended to be used and must be used for informational purposes only. It is very important to do your own research and analysis before making any investment based on your personal circumstances.

What is a golden cross?

Among the indicators that we have all reviewed, there is one that shines by its simplicity and that is the moving average. A strategy often used in trading, with varying degrees of success, is the moving average cross.

A golden cross is simply a crossing of a 50 period moving average with a 200 period moving average. The longer the time frame, the more relevant the cross will be. An intraday cross will have much less value than a cross of the 50 day moving average with the 200 day moving average.

Is this enough to determine the trend?

As we have discussed in previous articles, convergence is very important. A break of resistance will have more weight if it is accompanied by a rise in bullish volume as well as a stochastic cross.

It is the same thing for a golden cross, it is not because a moving average crossing occurs that the market will necessarily be bullish, it should be analyzed in conjunction with other indices such as volume, or a higher high and high low evolution.

The golden cross alter ego

Just like good and evil or hot and cold, the golden cross also has its bearish alter ego, the death cross. As you can see, it is the crossing of the 50 period moving average with the 200 period moving average downwards.

Its implication is therefore rather bearish even if, as for the golden cross, one should always take the result of an indicator with a pinch of salt and not base one’s judgment on this fact alone.

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Why should you be wary of it?

For the same reason as the other indicators. Technical analysis is an art because it requires a high degree of self-control. But it is also a set of self-fulfilling prophecies. Moreover, it is useful to remember that trading is about probability, not certainty.

Bitcoin Overview

At the time of writing this, for Bitcoin, the most important level to hold is the 46-47k zone. If we lose this one, 42-44k will be the last defense between the 30K region. If we can break the 50k successfully, then we may see higher prices and even a new ATH in the coming weeks or months. For now, trade safely.

Bitcoin Overview

Conclusion

Based on the above, you can conclude that it takes more than one set of indicators to determine market trends. As discussed above, we should always take other factors into consideration such as the volume and high low evolution. 

Trading is a complex art to master, with many moving parts to take into consideration. But this doesn’t mean you have to give up on trading crypto totally. It is difficult but not impossible. 

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