In the introductory article of Moving Average we have answered the basic questions like what Moving Average is, how it is calculated, and an overview of how MA is used in the trading. So if you don’t have a basic understanding of what Moving Average is then you can refer to the Introductory article on Moving Averages
Considering you have a basic understanding of the Moving Average we will see a few trading strategies using the Moving Averages. Before heading to the main topic please remember these trading strategies are not guaranteed profit, this article is just for educational and entertainment purposes only. Things can change in the market in the blink of an eye, so do your own research before making any financial decision.
In this article, we will look at the very popular trading strategy called the Golden/Death Cross. How it is interpreted and how it can be implemented in the market.
If you are an active trader in the crypto-space you might have definitely heard about the Golden cross or Death cross. This is basically a Moving Average crossover trading strategy and of course a very popular and widely used.
The strategy is comparatively easy to understand, it provides bullish or bearish signals based on the crossing of short-term SMA and long-term SMA. Here a 50-Day SMA and 200-Day SMA are used and signals are indicated accordingly. The bearish signal is interpreted after the short-term SMA that is 50-Day MA crosses below the long-term SMA that is 200-Day SMA, it is referred to as the Death cross. Opposite to that the bullish signal is interpreted after 50-Day SMA crosses above the 200-Day SMA, it is referred to as the Golden cross.
You can check out both Golden cross and Death cross scenarios in the following pictures:
Hope you guys find this article informative and helpful to understand the usefulness of Moving Averages in trading setup. We will discuss the remaining trading strategies in the upcoming articles until then keep exploring the world of crypto and keep learning & sharing.
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