The Golden and Death Cross Moving Average Strategy

Jasper Osita - Market Analyst

2025-07-23 12:54:18

Previous Lessons:

If you’re just joining the series, start here:

Part 1: Moving Averages for Beginners
Part 2: Best Moving Average Settings for Your Trading Style
Part 3: How to Use Moving Averages as Dynamic Support and Resistance Zones
Part 4: Simple Moving Average Strategy: For Entries, Exits, and Trend Confirmation

Goal of This Lesson

To break down the three most common moving average crossover strategies — the Golden Cross, Death Cross, and Triple MA Stack — so you can confidently use them to identify trends, catch reversals, and avoid false breakouts.

What is a Moving Average Crossover?

A moving average crossover occurs when a faster-moving average (like the 20 EMA) crosses above or below a slower one (like the 50 SMA). This creates a visual signal of trend momentum shifting — either accelerating or weakening.

Golden Cross: The Bullish Signal

A Golden Cross happens when a shorter MA crosses above a longer MA (typically 50 SMA crossing above 200 SMA).

Death Cross: The Bearish Reversal

A Death Cross forms when a shorter MA crosses below a longer MA (e.g., 50 below 200), signaling potential long-term weakness.

How to Trade the Golden / Death Cross

Step 1: Mark the Current Price Action Range

Mark the support and resistance levels that has not been tested yet.

Crosses usually occur when:

Price is on a sideways range
Transitioning from the previous trend to another

Note: We are not trading the actual cross immediately. The cross is our signal for a potential trend shift. Stay out. Wait for a price action confirmation.

Step 2: Wait for a Breakout + Pullback to the MA Zone

20 EMA gives shallow pullbacks for fast trades
50 SMA catches deeper mean-reversion setups
Bonus: Look for pullback near key levels like a Fair Value Gap (FVG), Order Block (OB), or Previous High/Low.

You're not chasing breakouts — you're trading the retest.

Step 3: Trigger the Trade with LTF Golden Cross + Breakout

Use price action confirmation at the moving average zone:

Bullish or bearish engulfing candle at MA
Wick rejection with close back into trend direction
BOS or CHoCH forming near MAs
Liquidity sweep + strong impulse candle

Enter only on candle close that confirms direction and trend.

Stop-Loss Placement Guide

Entry Type	Suggested Stop Placement
20 EMA bounce	Below swing low + EMA wick
50 SMA pullback	Below structure/consolidation
Aggressive entry	Below entry candle or FVG zone

Trailing Your Trade: Ride the Trend with Confidence

Method 1: Structure-Based Trail

Move SL below higher lows (in uptrend)
Move SL above lower highs (in downtrend)
Keeps you in trade while following price structure

Method 2: EMA-Based Trail

If price stays above 20 EMA, stay in the trade
Exit only if:
- Price closes below 20 EMA
- A structure break confirms trend weakening

Use 50 SMA for deeper trend follow-through on swing trades.

Don’t place your stop right on the MA line — give price room to breathe.

Pro Tip: You could use the Structure + EMA Trail for Stops

Real-Life Analogy: Changing Gears While Driving

Think of a moving average crossover like shifting gears in a manual car.

A Golden Cross is like moving from 2nd to 3rd — you’ve got enough speed to push higher.
A Death Cross is like downshifting — things are slowing down, and you need to be cautious.

Alternative Crossover Settings (Shorter-Term Variations):

Crossover Pair	Use Case	Common Application
20 EMA / 50 EMA	Swing & intraday trading	More sensitive to short/mid-term trend shifts
9 EMA / 21 EMA	Momentum scalping	Reacts quickly in trending markets
10 EMA / 30 EMA	Forex intraday/swing	Balanced crossover for FX pairs
20 SMA / 100 EMA	Crypto / Volatile markets	Good for fast-trending markets like BTC, NASDAQ

These alternatives are valid and often preferred in:

Faster markets (indices, crypto, forex)
Intraday charts (M15–H1)
Shorter holding periods

Important Note:

The meaning of the Golden/Death Cross stays the same: a bullish or bearish trend signal via crossover.
The reliability depends on:
- The timeframe you use
- The volatility of the asset
- Whether you confirm with price action

When to Use 20/50 vs 50/200

Use 20/50 When...	Use 50/200 When...
You trade actively (intra/swing)	You're holding positions for weeks/months
You want faster confirmation	You want slower, more stable signals
You trade volatile assets	You're investing in equities/indices
You combine with price action entries	You're building macro bias

If you’re trading forex, crypto, or NASDAQ intraday, the 20/50 EMA crossover can be your personalized Golden Cross.

Just remember — no crossover should be traded blindly. Always pair it with:

Structure
Momentum candles
Liquidity sweeps
Break of structure (BOS/CHoCH)

When NOT to Trust MA Crossovers

In choppy or sideways markets (MAs crisscross constantly)
During low volatility sessions (like holidays or pre-news)
When price is too extended above or below the MAs

Instead, combine MA crossover logic with:

Price structure (support/resistance zones)
Volume spikes
Fair Value Gaps (FVGs) or order blocks

Price Action Still Comes First

Always remember:

Moving averages are delayed — they calculate based on past prices.
Price action is real-time. It’s the actual message — MAs are the echo.

Use MAs as:

Trend filters

Re-entry zones

Confirmation of structure

But rely on price structure (breaks, sweeps, BOS, CHoCH) to trigger trades.

Final Thought

Crossover signals are not magic entries — they’re visual confirmations of momentum shifts.

Used with price action triggers, structure, and multi-timeframe awareness, they become a powerful tool to stay on the right side of the trend.

The best traders don’t blindly trade the cross — they use it to confirm their directional bias and wait for clean structure-based entries.

Pair it with real price action and structure — that’s when moving averages shine.

This Week’s Challenge:

Add 20 EMA and 50 EMA to your intraday charts
Spot a crossover and wait for price to pull back
Watch how price reacts around the MAs — screenshot and log the result
Write your rules: “I enter only if [trigger] happens after the crossover”

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This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

Penulis

Jasper has been in the markets since 2019 trading currencies, indices and commodities like Gold. His approach in the market is heavily accompanied by technical analysis and of course, supported by fundamentals. He has a background in trading proprietary firms and has been teaching students how to navigate themselves in the markets from basic to advance concepts.

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