If a Golden Cross occurs, then you can look for bullish trading setup like a Flag Pattern, False Break, Triangles, etc (which I’ll cover more later). Instead, it means you have the “permission” to look for long trading opportunities when the 50MA cuts above the 200MA - a big difference. It doesn’t mean go long immediately when the 50MA cuts above the 200MA. Look for short setups when the 50-day crosses below the 200-day Moving Average: Look for long setups when the 50-day crosses above the 200-day Moving Average: Or if the 50MA crosses below the 200MA, then you’ll look to short only. If the 50MA crosses above the 200MA, then you’ll look to long only. If you’re the type of trader who always can’t seem to decide whether you should be long or short, then this trading technique is for you.īecause the Golden Cross can act as a trend filter so you can trade on the right side of the markets (and increase your winning rate). Read on… How to use the Golden Crossover Strategy and increase your winning rate Instead, there are better ways to trade it and I’ll tell you more in the next section. Unless you know what you’re doing, I don’t suggest “blindly” trading the Golden Cross. Let’s go long when the 50MA crosses above the 200MA and sell when it crosses below - and make a ton of money!īecause in a range market, the Golden Cross will cause many losses (otherwise known as a whipsaw). Moving on… How NOT to trade the Golden Cross Pattern The moving average is only a tool to define the trend. You can use the 49-period and 199-period for all you want and it will not matter.īecause the concept is what matters (which is the short-term trend showing signs of strength against the long-term downtrend). Now some of you are probably wondering: Is there anything magical about the 50 and 200-day moving average? Pro Tip: The opposite is the Death Cross - when the 50-day moving average crosses below the 200-day moving average. So, when a new uptrend begins, the 50-day moving average must cross above the 200-day moving average - and that’s known as the Golden Cross. When the market is in a long-term downtrend, the 50-day moving average is below the 200-day moving average. The Golden Cross Pattern is a bullish phenomenon when the 50-day moving average crosses above the 200-day moving average. What is a Golden Cross and how does it work?
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