Golden Cross literally means gold intersection and gives the signal of the bull market, that is, the bull market, in the long-term period for the markets. The opposite death cross, on the other hand, is the intersection of death and indicates a bear market in the long-term period.
Technical analysis; It is a type of statistical analysis that describes the interpretation of an asset or commodity using price, volume and chart data. When analyzing stocks, markets, and cryptocurrencies, many charts and data are interpreted. The lines in these interpreted graphs are loaded with different functions and descriptions. For example; Cup handle, shoulder and head, double crests are the most familiar formations. Investors and analysts interpret these trends and make investment choices.
If we go into the detail of the golden cross, it is the bullish signals that occur when the short-term average movement breaks the long-term average movement. The golden cross, which performs its first stage after seeing the bottom price of the market with the end of the sell-off, then marks the beginning of the bull run by completing the formation of the short-term trend with a transition over the long-term trend and the reversal of the bottom trend.
Traders who prefer to invest in the form of short positions or daily buy-sell take into account intraday golden cross analysis, while long-term investors prefer big time periods, 1-day or weekly candlestick charts.
The trend, also known as the death intersection, means that the short-term trend goes below the long-term trend. As a result of the sales realized, the bottom level in the price of the stock, commodity or crypto is reached, and the starting signal of the bear trend is burned in the long term. Since it is a long-term interpretation, it is a reliable indicator to avoid profit losses for investors who make their investments in the ‘profit is worthy of pocket’ mentality. Because during the Great Depression of 1929, the oil crisis in the 1970s and the mortgage crisis of 2008, it is a reliable forecaster and an important guide.
In Death and Golden Cross analysis, the optimum time frame values are 50-day short-term and 200-day long-term trend analysis. The evaluations in these time scales help to reach the most effective result and to interpret the market in the most accurate way and to take a position.
Although the golden-death cross interpretation is interpreted in the 50/200 parity, not every golden cross refers to the bull. These trends need to be supported by indicators (indicators) such as RSI, MOM, BB.
RSI( Relative Strength Index)
The relative strength index aims to make a prediction about the short- and medium-term trend by comparing the closing value of the asset in question with the previous closing values. Simply by measuring the imbalances in the rise and fall of the price, it determines the rate of normalization in these imbalances and provides the investor with buy-sell signals. Commonly used reference values are in the range of 30-70. A fall below 30 of the reference value provides the investor with a buy signal, while crossing the value of 70 gives the sell signal.
MOM (Momentum Indicator)
It is an indicator that shows the percentage development of the financial asset or instrument in certain parities and summarizes how much it has gained and lost during this period. It gives a ‘buy’ signal when the indicator bottoms out and the price indicator starts to oscillate above this level, and a ‘sell’ signal when the indicator is above and the price oscillates down from the top.
BB (Bolinger Bands)
It is a technical analysis tool developed by John Bolinger. The market price is taken within safe price limits and price changes are monitored within these limits. While the 20-day price average is within these limits, the upper limit is; The 20-day mean + 2x standard deviation is determined as the lower bound + 20-day mean + 2x standard deviation. When the prices break close to the upper limit within the safe limit, this can be considered as a selling opportunity, and in the breakdown near the lower boundary, it can be considered as a buying opportunity.