Highlights: ①. Gate's "Basic Futures Courses" course introduces various methods of technical analysis that are commonly employed in futures trading. These courses aim to help traders establish a comprehensive framework for technical analysis. Covered topics include the basics of Candlestick charts, technical patterns, moving averages, trend lines, and the application of technical indicators. ②. This article will explore two technical patterns formed by moving average crossovers, which mainly include golden cross and a death cross.
1. What is MA crossover? Moving Averages (MAs) intersect during their course of movement, forming two key crossover patterns: the Golden Cross and the Death Cross. Below, we will elaborate on these two patterns. ①.Golden Cross A Golden Cross emerges when all Moving Averages trend upward, and the MA with a shorter period crosses above the MA with a longer period. This can be seen, for example, when the MA5 breaks above the MA30, or the MA30 crosses above the MA60. ②. Death Cross A Death Cross forms when all MAs trend bearishly, and the MA with a shorter period descends to break below the MA with a longer period. Examples include the MA5 crossing below the MA30, or the MA30 moving below the MA60.
2. How to identify a golden cross and a death cross? ①.Golden cross a. The MA with a shorter period crosses above the one with a longer period ; b. All moving averages are moving upward; c. It can appear in either a bullish or bearish trend. ②.Death cross a. The MA with a shorter period falls below the one with a longer period; b. All MA are running downward; c. It can appear in either a bullish or bearish trend.
3. Technical meanings Golden cross When a Golden Cross emerges during an upward trend, it indicates a potential rise in the currency's price, suggesting an opportune entry point for traders. This bullish signal is particularly credible when it involves a Golden Cross formed by the short and medium-term Moving Averages (MAs), while the medium and long-term MAs are also arranged in a bullish pattern. ①. However, traders should exercise caution with Golden Crosses formed by medium and short-term MAs during a downward trend. Although these may suggest potential price rises, the bullish signal could be misleading. It's especially advisable to avoid hasty entry decisions when facing a Golden Cross formed by short and medium-term MAs, while the medium and long-term moving averages are arranged in a bearish pattern.
②. In markets experiencing sideways consolidations, Golden Crosses can occur frequently as the short, medium, and long-term MAs cross over each other repeatedly. However, most Golden Crosses in these scenarios are unreliable and should not be solely relied upon for making trading decisions. Death cross Death cross carries the opposite meaning as golden cross.
4. Use case ①.Golden cross
This is the 4-hour candlestick chart of the Gate futures BTC market. It shows that the MA30, MA60, MA120, and MA180, arranged from top to bottom, all trend upward. After forming a bullish pattern, a Golden Cross emerges when the MA5 ascends to cross above the MA30. During the ensuing prolonged bullish wave, BTC's price rose from US$30,000 to over US$60,000, marking an increase of more than 100%.
②. Death cross
The image above displays the 4-hour candlestick chart of the Gate futures BTC market. This chart illustrates a downward trend, characterized by the MA5, MA30, MA60, MA120, and MA180, which are arranged from bottom to top, all trending downward. Following this, the MA5 declines and successively crosses below the medium and long-term moving averages (MA30 and MA60), forming a Death Cross. This crossover initiates a bearish cycle, during which the BTC price plummeted from US$68,000 to around US$28,000.
5. Summary The Golden Cross and the Death Cross are significant patterns in trading that use the relative positions of short-term, medium-term, and long-term moving averages to reflect market conditions. These patterns are highly beneficial for traders in identifying potential entry points. Particularly, their ease of identification and straightforward trading principles make them especially suitable for those new to the crypto market. By adeptly utilizing these patterns to determine buy and sell points, novice traders can significantly enhance their success rate during the early stages of market participation. Start trading futures by registering on Gate Futures.
Disclaimer This article is for informational purposes only and does not constitute investment advice. Gate is not responsible for any investment decisions you make. Content related to technical analysis, market assessments, trading skills, and traders' insights should not be considered a basis for investment. Investing carries potential risks and uncertainties. This article offers no guarantees or assurances of returns on any type of investment.
