GLOSSARY // Technical Analysis
Golden Cross
A golden cross occurs when the 50-day moving average crosses above the 200-day moving average, signaling that intermediate-term price strength has overtaken the long-term trend. It is the standard chart definition of a shift from a bearish or neutral regime to a bullish one.
Because both averages lag, the cross confirms strength that already happened rather than predicting new strength; by the time the lines cross, the stock has typically already rallied 15-25% off its low. The signal's value is regime identification, not timing. Backtests on major indexes show markets tend to perform decently in the months after a golden cross, but the sample of signals is small and plenty of crosses have fired just before pullbacks.
The mirror-image signal, the 50-day crossing below the 200-day, is the death cross.
An index ETF bottoms at 380 in October. By March it trades at 445, and the 50-day average, pulled up by five months of gains, crosses above the 200-day at 428. Anyone waiting for the cross to buy paid roughly 17% more than the low. Over the following year the ETF reaches 495, so the signal still preceded gains, just late ones.
Put it to work
Related terms
Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.