Trading glossary
A moving average crossover occurs when two moving averages of different lengths cross, a pattern analysts study for possible shifts in trend.
A moving average crossover happens when a shorter-term moving average crosses a longer-term one on a price chart. Because a shorter average reacts more quickly to recent price than a longer average, the point where they cross can highlight a change in the recent balance of the market. Analysts study crossovers as one way to describe when a trend may be turning.
Two crossovers have widely used names. A golden cross occurs when a shorter average, often the 50-period, crosses above a longer one, often the 200-period, and is studied as a possible sign of strengthening upward momentum. A death cross is the opposite, with the shorter average crossing below the longer, and is watched for signs of weakening. The names describe the setup, not any assured result.
Crossovers are appealing because they are simple and objective, giving a clear point where two lines meet. Their main drawback is lag, since moving averages are based on past prices and may signal a change only after part of a move has occurred. In sideways markets they can also produce frequent, misleading crosses, so traders often pair them with other tools rather than relying on them alone.
A golden cross is when a shorter moving average crosses above a longer one, studied as a possible sign of upward strength. A death cross is when the shorter crosses below the longer, watched for signs of weakening. Both name the setup, not a guaranteed outcome.
Moving averages are calculated from past prices, so a crossover can appear only after a move is already underway. This lag means the signal may arrive late, which is why traders often combine it with other analysis.