What are the golden cross and the death cross?

Two lines cross on a chart and suddenly everyone is talking about a rally or a drop?

To understand what they’re seeing, think of your average electricity bill over the last few months compared with the average over a longer period. The first reacts faster to recent changes. Moving averages work in a similar way: they smooth out price fluctuations so the trend stands out more clearly.

The classic version uses the 50-day and 200-day simple moving averages. The first calculates the average of the closing prices over the last 50 days and the second over the last 200. Each day the newest price is added and the oldest one dropped.

When the 50-day average crosses above the 200-day average from below, a golden cross forms. If it crosses below it from above, you get a death cross. The names are dramatic, but the calculations remain simple arithmetic.

Why it matters

In technical analysis, the golden cross is usually read as a bullish signal and the death cross as a bearish one. They help people tracking a cryptocurrency describe how the recent trend is moving relative to the long-term one.

We find them useful for reading a chart, not as automatic trading orders. Trading volume and support or resistance levels add context, without making any signal infallible.

What to watch out for

Crossovers are lagging indicators because they’re based on past prices. By the time they appear, a big rise or fall may already have happened. In a market with no clear direction, the lines can cross repeatedly, giving misleading signals.

Also check the chart’s timeframe and settings. 50 and 200 periods on an hourly chart aren’t 50 and 200 days. A different type of moving average can also change when the crossover happens. A screenshot without this information tells only half the story.