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Forex

Golden Cross Signal – What Is It?  

Traders have been watching the golden cross pattern for some time now. In fact, its symbol has been around since the days of the Roman Empire.

The symbol has always represented stability and strength (not only) in the markets, but there are some investors who have looked at this chart pattern as a signal of financial trouble.

Should the markets start to break up in this pattern, it could indicate trouble in the legacy and real estate markets.

So, how does a trader interpret this golden cross stock meaning?

Interpreting the Golden Cross

One possible interpretation is that the price action is suggesting an uptrend continuation. Traders who understand the technical indicators can detect the continuation of the uptrend and look to enter long positions.

This form of price movement can occur at any time, but is most prevalent in markets where the dominant index is moving up. If the upward momentum continues, the price action will likely continue upward as well. It’s important to note that even if the price does break out of the greater range, the downward momentum will be strong enough to stop the price from further rising.

Combine Golden Cross with other Technical Indicators

Another interpretation is that the golden cross is being affected by technical analysis. This is the type of analysis that looks to use past price movements as a way to predict where the market will go in the near future.

Many professional traders have made a career out of using technical analysis to make day to day decisions about where to trade. They use technical analysis to make sure that they’re able to time the market and catch it when it’s moving in the right direction. As an example, if they spot a golden cross that is slowly breaking down, they’ll put their trades near this point so that they get the advantage of trading before the trend starts to reverse.

One suitable type of technical indicator is known as the MACD. The MACD is simply a chart that shows the path for the current price of the currency over a set period of time. As with the golden cross, the moving averages are used as guides for prediction.

In this case, the best way to use this form of analysis is to notice when the moving averages intersect a trend that is developing.

Final Words

There are many technical indicators for traders to use, of course. Traders should make sure that they find signals that they are comfortable with.

 

Some people will prefer the golden cross alone, while others prefer adding the MACD. It’s best to start by determining which of these two indicators is the most comfortable with. Then, they can begin looking for signals that provide strong support or resistance for the signal that they are getting.

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