The shining golden cross is a bullish breakout pattern established from a crossover encompassing a security’s short-term moving average breaking over its long-term moving average or resistance level. However, the shining golden cross signified a bullish market on the horizon and strengthened through high trading volumes. And, it happens because long-term indicators convey more weight.
If you are keen to build a stable crypto portfolio adding this method would increase your trades probabilities. The following section will see the complete shining golden cross guide in both the short-term and long-term.
What is a shining golden cross?
It is an ordinary random price movement from which investors find clues about the future price direction. The primary aim is to find the higher time frame traders are driving the price. Usually, higher timeframe traders are keen to make a longer-term profit from the market, and traders can track their path by using higher timeframe indicators.
We will use 200 SMA to find where the long-term bulls are heading in this shining golden cross. After that, we will use short-term EMA to find the entry area.
Moreover, the shining golden cross is not only a specific trading method, uses can combine it with other tools to make it more accurate and perfect. However, while traders are endeavoring to determine a shining golden cross, the indicator turns stronger in predicting an upward price movement if the longer the averages are used.
How to trade using the shining golden cross in trading strategy?
A shining golden cross consists of three phases.
- The first one is demanding a downtrend that bottoms out eventually since the selling has decreased.
- The second phase, a crossover is established by the shorter moving average and intersects the larger moving average to activate a breakout and trend reversal validation.
- The last phase is the continuous uptrend to following higher prices.
When these conditions are present in the price, we can buy any crypto assets from large-cap to mid-cap. However, it is risky to trade low cap instruments where enough past data is not available.
A short-term trading strategy
The strategy has developed based on the market’s upcoming momentum. In this trading strategy, we will use two moving averages, one is a 50-period moving average, and another one is a 200-period moving average. Moreover, this strategy will apply to the M5 and M15 time frames.
Bullish trade scenario
Entry
When the 50-period moving average crosses the 200- period moving average from downside to upside, it indicates an upcoming bullish momentum. Enter a long trade when the price retraces back to the 50-period moving average and has an impulsive bullish candle close above it.
Stop-loss
Place the stop loss order below the last swing level with at least a 5-10 pips buffer. However, you can also put the stop loss below the 200-period moving average for the safe side.
Take profit
Take the profit by calculating at least a 1:3 risk/reward ratio.
Bearish trade scenario
In the bearish trade scenario, the shining golden cross is known as the shining death cross.
Entry
The 50-period MA crossover of the 200- period moving average from upside to downside indicates an upcoming bearish momentum. Please enter a short trade when the price retraces back to the 50-period moving average and has an impulsive bearish candle close below it.
Stop-loss
Place the stop-loss order above the last swing level with at least a 5 – 10 pips buffer. However, you can also put the stop loss above the 200-period moving average for the safe side.
Take profit
Take the profit by calculating at least a 1:3 risk/reward ratio.
A long-term trading strategy
The shining golden cross best works on the higher time frames. In this long-term trading strategy, we will use two moving averages, one is a 50-period moving average, and another one is a 200- period moving average. Moreover, this strategy will apply to the H4 and D1 timeframes.
Bullish trade scenario
Entry
When the 50-period moving average crossover the 200-period moving average from downside to upside, it indicates an upcoming bullish momentum. Enter a long trade when the price retraces back to the 50-period moving average and has an impulsive daily bullish candle close above it.
Stop-loss
Place the stop loss order below the last swing level with at least a 10 – 15 pips buffer. However, you can also put the stop loss below the 200-period moving average for the safe side.
Take profit
Take the profit by calculating at least a 1:3 risk/reward ratio.
Bearish trade scenario
In the bearish trade scenario, the shining golden cross is known as the shining death cross.
Entry
When the 50-period moving average crosses the 200-period moving average from upside to downside, it indicates an upcoming bearish momentum. Enter a short trade when the price retraces back to the 50-period moving average and has an impulsive daily bearish candle close below it.
Stop-loss
Place the stop-loss order above the last swing level with at least a 10 – 15 pips buffer. However, you can also put the stop loss above the 200-period moving average for the safe side.
Take profit
Take the profit by calculating at least a 1:3 risk/reward ratio.
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Final thoughts
To conclude, shining golden crosses are deemed to be dependable trading signals. Knowing the personal investing objectives of a trader is significant. The shining golden crosses can be a valuable signal for purchasing strategies. It is also beneficial if you are keen on buying and holding the assets in the long term. Also, the shining golden crosses may show signals that are potentially portrayed in both purchasing and selling opportunities if you endeavor to trade the assets more diligently.
