Golden Cross

The Golden Cross is one of the most widely followed bullish chart signals in technical analysis, occurring when a shorter-term moving average crosses above a longer-term moving average. The most common and significant version is the 50-day simple moving average (SMA) crossing above the 200-day SMA. This crossover signals that recent price momentum has shifted upward and that a potential long-term uptrend may be forming. The Golden Cross develops in three stages: first, a downtrend where the short-term MA is below the long-term MA; second, a reversal where the short-term MA turns up and crosses above the long-term MA; and third, a continuation of the uptrend. While the Golden Cross is a lagging indicator (it confirms a trend change that has already begun), historical analysis of the S&P 500 shows that returns following golden crosses have been significantly above average over 6-12 month periods. The opposite signal — the 50-day crossing below the 200-day — is called the Death Cross.