A golden cross is an upward crossover of a shorter-period moving average through a longer-period moving average. Traders commonly interpret it as a sign that recent price strength has improved relative to the longer history. The widely cited version uses the 50-day and 200-day moving averages, although other periods are also used.
Defining the two lines
A 50-day simple moving average is the arithmetic mean of the latest 50 daily observations, usually closing prices; the 200-day version uses 200. A golden cross requires a change in their ordering. The shorter average merely remaining above the longer one is not a new crossover every day.
Some charts use exponential averages, which place more weight on recent data. Different average types, data sources, and candle boundaries can produce different crossover dates. An apparent cross on an unfinished candle can disappear before the candle closes.
Interpreting the signal
Moving averages use past prices, so the crossover can occur after a substantial rally has already happened. It does not independently establish a lasting bull market or a profitable entry.
In sideways conditions, repeated crossings can generate conflicting signals. A golden cross describes the relationship between two averages; future price performance remains uncertain.