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What Is a Golden Cross?

A golden cross is a chart pattern in which a relatively short-term moving average crosses above a long-term moving average. It is a bullish breakout pattern that forms when a security's short-term moving average (such as the 50-day moving average) crosses above its long-term moving average (such as the 200-day moving average) or resistance level. The golden cross indicates the possibility of a long-term bull market emerging. High trading volumes generally reinforce the indicator.

Key Takeaways

• A golden cross is a technical chart pattern indicating the potential for a major rally.
• The golden cross appears on a chart when a stock’s short-term moving average crosses above its long-term moving average.
• The golden cross can be contrasted with a death cross, which indicates a bearish price movement.
• The golden cross because is a lagging indicator, which means traders should use it with other tools in their decision-making.