These measures can change very quickly, and long before «trend following» signals such as moving -
average crossings occur.
Not exact matches
Many traders use two (or more) moving
averages, so another type of crossover
occurs when one moving
average crosses another, such as a 50 - day
crossing a 200 - day.
Several golden
crosses occurred in the SPDR Dow Jones Industrial
Average ETF (DIA), shown in Figure 5.
This
occurs when the short - term moving
average (5 - day blue line)
crosses below a longer - term one (20 - day red line)
Death
crosses can
occur on shorter time frames as well, such as utilizing a 10 - day and 15 - day moving
average like in the golden
cross example.
The most popular death
cross, which is often referenced in the media,
occurs when the 50 - day moving
average crosses below the 100 - day or 200 - day moving
average.
This
occurs when the short - term moving
average (5 - day blue line)
crosses above a longer - term one (20 - day red line).
This
occurs when two or more moving
averages of different lengths are used, and one
crosses the other.
This signal
occurs when the 50 - day moving
average crosses above the 200 - day moving
average, confirming an uptrend.
A «golden
cross»
occurs when the 50 - day simple moving
average rises above the 200 - day simple moving
average and indicates that higher prices lie ahead.
A «golden
cross» has not yet
occurred, with the 50 - day moving
average still below the 200 - day, but such a move appears likely in the next few trading sessions if upward momentum can be sustained.
In addition, many traders look for times when a shorter - term moving
average crosses above or below a longer - term moving
average as this can signal that a change of trend is
occurring and provide the basis of a buy or sell signal.
For example, the «golden
cross»
occurs when a moving
average, like the 50 - day exponential moving
average,
crosses above a 200 - day moving
average.
This «death
cross» would
occur if a 50 - day moving
average crossed below a 200 - day moving
average.
Then, like the earlier pair of USD / JPY, the calculation gets a little messy here as the
cross of the moving
average hadn't
occurred at the time when MACD went below the zero line as it did with the EUR / USD pair.
Downward momentum is confirmed with a bearish crossover, which
occurs when a short - term moving
average crosses below a longer - term moving
average.
* The «death
cross»
occurs when the stock market's 50 daily moving
average crosses below its 200 daily moving
average.
It's also important to note that the trade must be closed at the market price (near $ 1330) when the
cross occurred, not the $ 1315 level where the two moving
averages actually
crossed.
The sell signal
occurs as the MACD line (the 12 - day moving
average minus the 26 - day moving
average)
crosses below the MACD signal line (the 9 - day moving
average of the MACD line).