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Topic: Golden/death cross (Read 64 times)

Husires
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Golden/death cross
February 27, 2022, 10:33:03 AM
#1
Disclaimer: The information's contained in this explanation is the result of my understanding of (Golden Cross and Death Cross) and may contain some errors. Search and confirm about it.

Table of contents

      1. Introduction
      2. Definition of golden cross
      3. Definition of death cross
      4. Golden cross VS death cross



Introduction

Some believe in the ability of technical analysis to predict prices. technical analysis has many patterns that can be beneficial to traders, or who want to invest in the long term.
I will try to read more about technical analysis and share with you some information periodically, so do not take the information presented here as facts.

Before we begin we have to understand more about the moving average (MA), it is simply a line drawn on a price chart that measures the average price of the asset for a specific time frame. Let's take for example the 50 day moving average that will measure the average price of the asset in the last 50 days.

Bitcoin Market trend is over trend where the price of bitcoin is heading. There are two main types of market trends: the bullish and falling market. As the bullish market consists of a continuous bullish trend. And vice versa.



Definition of golden cross


It occurs when a short-term moving average crosses over a long-term moving average.

The basic idea is that the short-term average crosses with the long-term average so that the 20-day moving average can be used as the short-term average, and the 200-day moving average can be used as the long-term average.

We can express his steps as follows:

  • During the downtrend: the short-term moving average is less than the long-term moving average.
  • Trend reversal: The short-term moving average rises beyond the long-term moving average.
  • The uptrend begins.


Thus, the golden cross may be considered an important bullish signal. But why does this happen?
We all know that the moving average measures the average price of the asset over a specific period, when the short-term moving average is less than the long-term moving average, this means that the short-term price movement is bearish, and when the overtaking occurs this indicates a possible shift In the direction of the market.

Therefore, it does not require that the period be long, so it can happen in averages such as (15 minutes, 1 hour.)

Is this method accurate? Simple Moving Average (SMA) does not give accurate results as it provides more error signals, therefore traders use Exponential Moving Average (EMA) as it places more focus on the newer price movement.



Definition of death cross

Basically a reflection of the golden cross, where the short-term moving average is the long-term moving average. Hence a bearish signal.

Steps that take place:


  • During an uptrend: the short-term moving average is higher than the long-term moving average.
  • Trend reversal: The short-term moving average crosses below the long-term moving average.
  • The downtrend begins.



Some false signals may occur, for example, in 2016.



Golden cross VS death cross

It will not be difficult to distinguish between them, they are opposites like negative and positive, and both can be confirmed through high volume.
We do not forget to mention that such indicators do not have a predictive power of what is happening, but rather a reflection of the market. Therefore, they confirm what happened.

Will it get rich once I buy/sell before it happens? Follow a single walk-like strategy with your eyes closed, so you may want to consider other factors when it comes to market analysis techniques.
It is also important to track time frames more closely, so it is useful to review the time frame within an hour of a day, and so on.



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