Golden Cross

A bullish technical chart pattern where a short-term moving average crosses above a long-term moving average.

A golden cross is a bullish technical chart pattern that occurs when a relatively short-term moving average crosses above a long-term moving average. It signals a potential shift from a long-term downward trend to a sustainable upward trend. In most standard technical analysis, this pattern is identified using the 50-day moving average as the short-term indicator and the 200-day moving average as the long-term indicator. The pattern unfolds in three distinct phases. First, a long-term downtrend bottoms out as selling pressure depletes. Second, the short-term moving average crosses above the long-term moving average, which formally triggers the golden cross. Finally, the upward trend continues, with the long-term moving average often acting as a support level during subsequent price pullbacks. Investors and momentum traders monitor the golden cross because it suggests that short-term price momentum is accelerating relative to historical averages. When accompanied by high trading volume, the signal is generally considered more reliable. However, because moving averages are lagging indicators based on historical data, the crossover occurs after the price has already begun to rise. This lag can sometimes result in "whipsaws," where a cross occurs just before a market reversal, trapping buyers at a local peak.

A stock's 50-day moving average rises to $50.50, crossing above its 200-day moving average of $50.00. This crossover occurs on high trading volume while the stock price itself trades at $53.00, confirming a golden cross pattern.