Technical Indicators

Golden Cross / Death Cross

At a glance

A chart signal in which a short-term moving average crossing above a long-term one is read as a golden cross (a sign of a turn upward), and crossing below it as a death cross (a sign of a turn downward).

Golden cross = a short-term moving average (e.g., 50-day) passes from below to above a long-term one (e.g., 200-day)

A golden cross means the short-term flow has risen above the long-term flow, so it is commonly read as a sign of a turn into an uptrend.

In plain terms

There is a short-term moving average (e.g., the 50-day line) showing the price's "recent flow" and a long-term line (e.g., the 200-day line) showing the "longer flow." The moment the short line breaks up through the long line from below is called a golden cross.

Conversely, the moment the short line breaks down through the long line from above is a death cross. Think of it as a name given to the "junction where the direction of the flow changes."

What it tells you

It shows at a glance whether the recent mood (the short-term line) has moved past the larger flow so far (the long-term line). It is widely used to gauge whether a trend is about to turn up or down.

The crossing of the 50-day and 200-day lines is the most widely talked about. Because many people watch the same lines, that itself can become a signal that draws the market's attention.

Formula

Golden cross = a short-term moving average (e.g., 50-day) passes from below to above a long-term one (e.g., 200-day)
Death cross = a short-term moving average passes from above to below the long-term one

What high or low means

A golden cross means the short-term flow has risen above the long-term flow, so it is commonly read as a sign of a turn into an uptrend.

A death cross is the opposite — it's read as a signal of a turn toward a downtrend. That said, both are the result of averages of "prices that have already passed" crossing, so they show up a beat late.

Caution

Moving averages are lagging indicators, so by the time a golden cross appears the price has often already risen quite a bit. The lateness of the signal is a limit of this indicator.

In a sideways market the two lines tangle often, so "false signals" — golden and death crosses appearing in turn — are frequent.

This signal looks only at price movement, so it has nothing to do with the company's value. In itself it is not a suggestion to buy or sell, but a reference tool for reading a trend.

Metrics to read alongside

Moving Average (SMA)

Golden and death crosses are names for the crossing of two moving averages. Once you know how moving averages work, it becomes natural to understand why these signals come late.

MACD (Moving Average Convergence Divergence)

MACD also uses moving averages to look at the strength of a trend. Viewed together with crossover signals (golden and death crosses), you can check whether the turn is carrying any force.

RSI (Relative Strength Index)

Looking at trend direction through crossovers and at whether things are heated or subdued through RSI at the same time can reduce being swayed by a single signal.

See it in real stocks

Search US stocks on Stocklore to see SEC-filing-based financial metrics alongside the sector benchmark.

CVI FAST Fastenal Co AWK American Water Works Company, Inc BAC Bank of America Corp NKE Nike, Inc.FTNT Fortinet, Inc.Search stocks →

Exactly how Stocklore computes this metric (formula, thresholds, SEC source) is on the methodology page.

This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.