Traders keep a track of the prices in crypto via calculating the moving averages of the prices. It is simply the arithmetic mean of prices calculated over a period of time.
When a short term moving average overtakes a long term moving average of a certain crypto, it leads to the formation of the golden cross, on the graph.
The 200 day moving average and 50 day moving average are considered significant markers for the stock price. So when a 50 day moving average overtakes a 200 day moving average it intersects at a golden cross.
There are three stages to the occurrence of a golden cross.
A downtrend that eventually ends as selling is depleted
A second stage where the shorter moving average crosses up through the longer moving average
Finally, the continuing uptrend, hopefully leading to higher prices
Simple moving average (SMA) and exponential moving average (EMA) pairings can both be used to create a golden cross. For additional confirmation of the pattern, some traders may seek for significant trading volume to go along with the golden cross.
