The Golden Cross is a tool used by traders to determine a bullish trend. It serves as one of the strongest bullish signals in the forex market. Traders use the Golden Cross pattern when they trade currency pairs, CFDs on shares, and buy cryptocurrencies. You can find more information about the Golden Cross in the following article.

What is Golden Cross

The Golden Cross is the cross of moving averages (MA) from bottom to top. When the pattern forms, 50-day MA and 200-day MA are used as a base. Oftentimes, traders are looking for the Golden Cross on other time frames. This pattern indicates a prolonged upward reversal of a trading instrument and an ideal buy entry point.

3 stages of Golden Cross

The Golden Cross is formed in 3 stages:

  1. The bearish trend ends when 50-day MA goes below 200-day MA.
  2. The moving averages cross.
  3. The bullish trend is about to begin when the short-term 50-day MA rises above the long-term 200-day MA.

Such a price movement on the chart signals an upward trend reversal. Importantly, a moving average is not the most mobile indicator. Traders use it more often so that they can confirm a trend, rather than predict its movement. That is why traders turn to other indicators when they trade with the help of the Golden Cross or the Death Cross, a pattern with the opposite price movement.

Trading using Golden Cross

The formation of the Golden Cross pattern gives a clear buy signal, whereas the Death Cross makes a sell signal. The ideal entry point is the moment after two moving averages have crossed each other, and the short-term one shows that the price is rising.

Based on the Golden Cross strategy, it is important to understand that crosses work the same way with different moving averages. But the signals MAs give are more accurate on higher time frames. That is why the Golden Cross suits traders with larger deposits who prefer long-term trading. At the same time, it can be used by market players with smaller deposits. In addition, the Golden Cross is easy to track because moving averages are displayed on MetaTrader 4 and MetaTrader 5.

How to use Golden Cross on MetaTrader 4:

  1. Download the Golden Cross indicator.
  2. Unpack the archive.
  3. Open File/Data Catalog.
  4. Move the unpacked files to MQL4\Indicators.
  5. Reload the trading platform.

The indicator appears in the User Indicators folder.

You can download any of the offered software versions of MetaTrader from the InstaForex official website and install it on your device.

Forex analysts suggest using the Golden Cross together with other indicators, such as the Ichimoku indicator, the Average Directional Movement Index (ADX), or the Relative Strength Index (RSI), in order to confirm a trend.

Conclusion

The Golden Cross can become a great bullish signal. It best suits trading on higher time frames. At the same time, with short-term MAs, the indicator can be used to enter a trade after assessing other indicators.

Together with InstaForex, you can apply any technical tool on the chosen trading platform. Moreover, you can adopt any trading strategy. All this provides immense trading opportunities.