Golden Cross Identified In Gold Price
New York (Jan 24) Market technicians use a multitude of moving averages in terms of’ the time cycles. These can vary from extremely short averages of three, seven or 10 minutes in length. Daily moving averages analyze long-term cycles and look at market momentum in terms of the big picture and long sustained moves.
In the case of looking for long sustained moves, the standards include a 50-day moving average, which indicates the intermediate or short-term trend of a stock or commodity. A 200-day moving average to indicate the long-term trend of a stock or commodity.
One of the more important technical patterns which market technicians are constantly looking for is when a cross occurs between two different length moving averages. When a longer-term moving average crosses below a shorter-term moving average it is called a “death cross”. This pattern is considered a bearish breakout which indicates that the market has been in a defined downtrend and has now broken with more momentum indicating a further decline in price.
When a shorter-term moving average crosses above a longer-term moving average it is labeled as a “golden cross”. This bullish breakout pattern can be created when any two different length moving averages have the shorter-term average crossing above the longer-term average. Most importantly this pattern indicates bullish market momentum.
Obviously, one of the most significant golden cross’s is when the 50 day, average, crosses above the 200-day moving average. Because markets do not trade straight up or straight down, technicians use a single moving average to determine the current trend. However, the cross (bullish or bearish) determines not only trend but more importantly indicates strong momentum is occurring in terms of the current trend visible in any given market.
Which takes us to our current scenario in gold. Over the last two days, we have identified a golden cross occurring on the daily charts in which the 50-day moving average is now crossed above the longest term 200-day moving average. This could indicate stronger momentum in terms of the bullish trend, which would result in higher pricing for gold.
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