What Is A Golden Cross?

A golden cross is a technical indicator that investors use to predict bullish market momentum. A golden cross forms when a security's short-term moving average rises above its long-term moving average.


There are three separate phases to a golden cross pattern. The first involves the security in question hitting the bottom of a downward trend as selling activity dries up. Next, the short-term moving average surpasses the long-term moving average, signaling both a breakout and new trend. In the final stage, the security enjoys a sustained upward trend and continued gains. When the security falls back, its moving averages act as support.

Investors can use many different moving averages when looking for golden crosses. These moving averages could span weeks, days or minutes. However, they should keep in mind that longer moving averages frequently signal rallies that are longer and stronger. For example, an investor could look for a golden cross using a 15-day and 50-day moving average, but this might reveal smaller rallies than using a 50-day and 200-day moving average.

Even so, some investors use golden crosses during intraday trading in an attempt to profit from short-term fluctuations. In this instance, they might use moving averages of 15 and 50 minutes to reveal bullish sentiment.

Concerns About Reliability

Some market observers have expressed concerns about the reliability of the golden cross.[1] Some research into this crossover pattern has shown it to be an ineffective predictor of future bull markets, at least in the short term.

After a short-term moving average surpasses a long-term moving average, the market could rise, but it might also fall, at least during shorter periods.[1] The Standard & Poor's 500 index experienced 23 golden crosses between 1973 and May 2016, gaining an average of only 1.31% in the 30 days following the crossover.[2] However, when examined during the year following the golden cross's appearance, the index enjoyed gains of more than 11%.

Confirming The Golden Cross

Investors have a few tools they can use to help confirm the information they receive from the golden cross. One method involves using additional momentum indicators, such as the relative strength index or the moving average convergence divergence (MACD). These tools can help provide insight into whether the security being studied is either overbought or oversold.

Another way investors can confirm trends is by looking at trading volumes, as high volumes can help reinforce the likelihood of a coming bull market. Armed with these tools, investors can make better-informed decisions about when to enter and exit positions.


Investors can use the golden cross to predict strong market sentiment. In some instances, the crossover pattern can help them identify the next bull market. However, investors should keep in mind that the signal is far more likely to be accurate over the long-term, and they can use both trading volume and also other technical indicators to help confirm bullish market momentum.

Any opinions, news, research, analyses, prices, other information, or links to third-party sites are provided as general market commentary and do not constitute investment advice. FXCM will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

FXCM Research Team

FXCM Research Team consists of a number of FXCM's Market and Product Specialists.

Articles published by FXCM Research Team generally have numerous contributors and aim to provide general Educational and Informative content on Market News and Products.



Retrieved 01 Jul 2016 https://www.cnbc.com/2016/04/26/looks-like-the-golden-cross-isnt-so-golden-after-all.html


Retrieved 01 Jul 2016 https://www.nasdaq.com/article/golden-cross-what-is-it-and-should-investors-watch-it-cm620734

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.