In building your trading strategy, it is essential to understand and manipulate long-term and short-term moving averages (MAs) to find gold crossings, regardless of whether you are aiming for a digital asset or traditional assets.
Two basic but strong signals that professional investors always aim for are when short and long-term MAs cross.
When these two lines cross, two cases will happen, one is that we will have a Golden Cross and the asset which we are watching will have a strong bull run. On the contrary, in the worst-case scenario, it is more likely that the asset will have a new bottom in the medium term.
According to the experience of professional investors, following the Gold Cross has helped them predict many of the worst economic recessions of the last century. Examples include the great crises of 1929, 1938, 1974, and 2008.
Crucially, they emphasize the potential of a major trend, allowing traders to navigate between Bitcoin (BTC) ‘s frequently jammed trends as well as the daily price fluctuations of the cryptocurrency market.
There are two main requirements for the Gold Cross, the first being the end of the strong downtrend due to exhausted sellers, meaning that downside pressure from the sellers in the market has decreased. The second requirement is the short-term MA surpassing the long-term MA, typically the 50 and 100 MA.
As you can see in the green section, a gold cross appeared on the daily chart for BTC in March, signaling a sharp rise out of the low of $ 3,122, ending the decline from December 15, 2018.
Starting March 12, the price of BTC has risen by 260%, from $ 3,859 to almost $ 14,000 on June 26.
Gold crosses are most effective when analyzing long time frames such as monthly, weekly, or daily charts.
On March 30, 2018, BTC converged many conditions for a major bearish run as the 50-day MA broke below the 200-day MA, resulting in a 54% drop in value from $ 6,850 to bottomed out at $ 3,122 on December 15.
Like gold crosses, dead crosses work best on longer timeframes, as trends like these will need to be confirmed the next day when they are not reversed.
However, one thing you should keep in mind is that these metrics are not always perfect, there will be exceptions and need to be verified by others, but the identification and use of intersections. This cutting can effectively be an invaluable rudder, helping you find your way when dealing with the most volatile assets in the world.