The golden cross is a highly accurate and bullish technical signal that investors can use to find stocks that can make good momentum trades. A golden cross pattern forms when a stock’s 50-day moving average crosses above its 200-day moving average. This pattern confirms that near-term momentum is strong enough to outweigh months of prior price movement.
The golden cross is also the preferred signal of many computer trading programs. When this pattern forms, it often triggers increased volume, including short covering that reinforces a strong move higher.
