A Golden Cross pertains to a chart pattern wherein a shorter-term moving average (MA) crosses on top of a longer-term moving average. This chart pattern usually signals a bullish period.
The Golden Cross pattern usually takes place in three stages:
● The presence of a downtrend where the shorter Moving Average is below the longer-term one
● There is a reversal and the shorter-term Moving Average crosses over the longer-term
● Continued uptrend commences; the shorter-term MA maintains its position above the longer-term Moving Average
Upon the consideration of a Golden Cross, the moving averages usually used are the 50-period and the 200-period Moving Average.
A Golden Cross is held valid through these of both SMA pairs and Exponential Moving Average pairs.