Golden Cross / Death Cross
Trend
The crossing of the 50-day average with the 200-day average — the best-known long-term signal in technical analysis.
Construction & calculation
- Compute the SMA(50) and the SMA(200) on the closing prices.
- Track the difference MA50 - MA200. When that difference changes sign, there is a crossing.
- The scanner checks whether that sign change occurred within the last 5 trading days, so only fresh crossings appear as a signal.
Golden Cross: MA50 crosses the MA200 from below to above
Death Cross: MA50 crosses the MA200 from above to below
Interpretation
- Golden Cross = the medium-term trend takes over from the long-term trend to the upside: confirmation of a new bull phase.
- Death Cross = the mirror image: the momentum of the last quarter is structurally weaker than that of the past year.
- The signal says little about the coming days, but historically much about the coming months.
Watch-outs & pitfalls
- Very late: at the moment of the crossing the bottom or top is often already 10 to 20% behind us.
- In a sideways market both lines can cross each other repeatedly (whipsaw). Combine with a trend-strength filter such as ADX.
- Requires at least 205 trading days of data.