Patterns › Golden cross vs Death cross
Look-alikes
Golden cross vs Death cross
They look alike, so beginners mix them up. Here is what each one means, and how often each one worked on real charts.
Golden cross
The 50-period average crossed above the 200-period average.
A moving average is the average closing price over a number of candles, drawn as a smooth line. The 50-period average follows recent prices, and the 200-period average follows the long-term picture. A golden cross is when the 50 crosses above the 200. It shows recent prices have been running above the long-term average, a sign the trend may be turning up.
Thinking the cross is an early signal, when the averages are slow and much of the move may be done.
Death cross
The 50-period average crossed below the 200-period average.
A death cross is when the 50-period moving average crosses below the 200-period moving average. It shows recent prices have been running below the long-term average, a sign the trend may be turning down. The name sounds dramatic, but it is just two slow lines crossing. Because averages are made from past prices, the signal can come after much of the fall has already happened.
Panicking because of the scary name instead of reading the whole chart.
Real odds side by side
| Pattern | Found | Target first | Stop first | Went nowhere |
|---|---|---|---|---|
| Golden cross | 7,379 | 37% | 56% | 6% |
| Death cross | 7,253 | 36% | 55% | 8% |
Counted by the Trading Class research engine on real past candles: entry at the signal candle's close, target 1.5 × ATR(14), stop 1 × ATR(14), 12 candles to decide, a candle that touches both counts as the stop. How we count. Past data, not a forecast and not advice.