Uptrend or Downtrend - Explanation for Golden Cross

After a long and busy weekend, I finally have some time for myself.

In my previous post, I mention golden agri is entering an uptrend mode due to the start of the golden cross..

 

So what exactly is the golden cross? In Technical Analysis term, the golden cross happens when a securities short-term moving average crosses or moves above its long-term moving average. Using the example in my previous post, the 50 days moving average (50ma) is closing in, in fact, touching the 150 days moving average (150ma). Once the crossing over is completed, it would indicate that, the stock has moved above its longer-term value and that the bull is on the horizon, this is to be further confirmed by high volume of buying pressure. In additional, the long-term moving average, will then becomes a new support line for the stock price.

A point to note, the golden cross although is used as an trend indictor, it does not define what exactly is a short-term or long-term moving average. Some analyst might use 10 days, 20 days, 50 days or even 100 days as the short-term moving average, other others might use 50, 100, 150 or 200 days for the long-term moving average. This is usually up the personal analysis method, and also highly dependent on the stocks pattern.

For less volatile stocks, like golden-agri, I will prefer to use the 50/150ma cross over for indiction. I feel that this combination provides quite an accurate result for stock of such nature. The 50ma short-term does not include too much volatility, while the 150ma long-term does not average out too much of movements.

Meanwhile do try out which moving average suits you better and look out for my post for any potential winner stock!