Golden and death crosses are often seen as signs of bullish and bearish price action, respectively
Investors are constantly hunting trends, signs, and signals that could help predict a stock or index's future movement. "Golden crosses" and "death crosses" are just two of the technical indicators utilized by traders seeking an edge.
A golden cross occurs when a short-term moving average crosses above a longer-term moving average. Most commonly, an equity or index's 50-day moving average and 200-day moving averages are used to determine when such a cross occurs. A golden cross is considered to be a bullish sign, signaling an oncoming upswing for an equity or index. Besides just signaling a potential upswing, the longer-term average often becomes a support level for that particular stock or index.
Alternatively, a death cross occurs when a short-term moving average crosses below a longer-term moving average. This is thought to be a bearish sign, signaling an oncoming decline for an equity or index. In the same way the long-term moving average becomes a level of support during a golden cross, with a death cross, the long-term moving average usually becomes a level of resistance. In addition, with both death crosses and golden crosses, the higher the trading volume that accompanies the signal, the more relevant the signal is considered to be.
While the accuracy and usefulness of such indicators are frequently debated, there seems to be evidence that golden and death crosses can indicate both short- and long-term trends to some degree. For example, AAPL experienced a death cross last week, after its 50-day trendline fell below its 200-day, which could lead to further losses in the short term.