Hello, my friend, and welcome to this tutorial on the Golden Cross simple moving average trading strategy. This is the second video of a two-video series on bullish/bearish markets using the Golden cross moving average trading strategy explained. Enjoy the video!
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Golden Cross – Simple Moving Average Trading Strategy Video
Welcome to this video tutorial on the Golden Cross chart pattern. This is actually part 2 of a two-part series. The previous video was about the death cross, ominously called since it is generally thought to be an indication of a bearish market. As you might anticipate, the Golden Cross is an indicator of a bullish market. So you can view this set even if you haven’t seen the other one.
It doesn’t truly matter which order you view them in. I’ll put a link below in the summary for the death cross video clip so you can see that one as well. The idea is the same, just contrary. However, I’m going to add a few extra things here today for you to ensure that you’ll get some additional benefit if you did see the other one. Alright, so the death cross was a bearish signal when the 50-period simple moving average moves below the 200-period simple moving average.
Golden Cross Moving Average
So that is considered a bearish trend indication. The Golden Cross is simply the opposite. The green line here represents the 50-period simple moving average, and the magenta line represents the 200-period simple moving average. So when the 50 ma moves above the 200 ma, that signals a Golden Cross, indicating a bullish market. Now, let’s see how that works out.
I’m going back here to show you some examples from a long time ago. As you can see, one of the first things I want to point out is that it worked out quite well. However, one of the challenges you have with the Golden Cross is that the moving average, specifically the 50 ma, goes up and then moves back down, almost crossing but not quite reaching the 200 ma. As it’s doing that, if you were to buy right at the time of the cross, you would go up a bit and then come back down. This creates a lot of volatility and can result in lower highs and lower lows.
Golden Cross Trading
This is not uncommon for this type of pattern, especially when using long-term moving averages. A 200-period simple moving average is the average of the last 200 bars, so you have to expect some volatility and breaking of highs and lows when trading this type of pattern. However, if you have the patience to wait for the 200 ma to start angling up along with the cross, the odds are better for a market that follows through to the upside. Here are some examples to illustrate this. In one example, the 200 ma is flat to down, indicating a bearish market.
Even though there is a Golden Cross, it would be better to wait for both moving averages to angle up before entering a trade. This can help avoid unnecessary volatility and provide a clearer signal. In another example, the two moving averages get very close together, suggesting a possible Golden Cross. However, both moving averages are sloping down, indicating a bearish market. Again, it’s important to consider the angle or slope of both moving averages before making a trade.
Wrapping Up!
I hope these examples help you understand the importance of considering the angle of the moving averages when trading the Golden Cross pattern. If you have any other topics you would like me to cover in future videos, please let me know in the comments below. And if you enjoyed this video and found it helpful, please give it a thumbs up.
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