How to buy the monthly moving average golden cross + weekly RSI oversold + daily long lower shadow?

The monthly golden cross, weekly RSI below 30, and daily long lower shadow together signal a high-probability bullish reversal in established cryptocurrencies.

Jul 27, 2025 at 05:35 am

Understanding the Monthly Moving Average Golden Cross

The monthly moving average golden cross is a bullish signal that occurs when the 50-month simple moving average (SMA) crosses above the 200-month SMA on a cryptocurrency’s price chart. This event is considered rare and significant because of the long time frame involved. To identify this signal, traders must access monthly candlestick charts on platforms like TradingView, Binance, or CoinGecko. Navigate to the chart settings, select “1M” (one month) as the time interval, then apply two moving averages: one set to 50 periods and the other to 200 periods. When the 50-month SMA line moves from below to above the 200-month SMA, the golden cross is confirmed. This indicates a potential long-term upward trend in the asset’s price.

It is essential to ensure that the crossover is genuine and not a false signal caused by short-term volatility. Confirm the cross by checking whether the crossover has occurred across at least two consecutive monthly candles. Also, observe the volume during the crossover month; increasing trading volume supports the validity of the signal. Cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) have historically shown strong bullish momentum following such crossovers.

Identifying Weekly RSI Oversold Conditions

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. An RSI value below 30 on the weekly chart indicates that the asset is potentially oversold, suggesting a buying opportunity. To apply this filter, switch to the weekly (1W) timeframe on your charting tool. Add the RSI indicator and set the period to 14, which is the standard setting. Monitor the RSI line and wait for it to dip below 30 and ideally begin to turn upward, signaling that downward momentum is weakening.

It is crucial to avoid acting on the first drop below 30. Instead, wait for confirmation—such as the RSI rising back above 30 or forming a bullish divergence (where price makes a lower low but RSI makes a higher low). This reduces the risk of catching a falling knife. For example, if Solana (SOL) drops sharply over several weeks and its weekly RSI hits 28, but then starts climbing while the price stabilizes, this could indicate renewed buyer interest.

Spotting Daily Long Lower Shadow Candles

A long lower shadow on a daily candle suggests that sellers pushed the price down during the day, but buyers stepped in strongly to drive it back up, often closing near the high of the day. This candlestick pattern reflects rejection of lower prices and potential bullish reversal. To detect this, view the daily (1D) chart and look for candles where the lower wick is at least twice the length of the body. The body should be small, and the closing price should be close to the top of the candle’s range.

For example, if Cardano (ADA) trades between $0.38 and $0.42 in a day but closes at $0.41, with a long wick down to $0.38, this indicates strong buying pressure at lower levels. This pattern is more reliable when it appears after a prolonged downtrend and aligns with the other two conditions. Use candlestick pattern recognition tools or manually inspect the chart for such formations.

Step-by-Step Process to Find and Buy the Signal

To execute a trade based on this combined strategy, follow these detailed steps:

• Open TradingView and connect your exchange account (e.g., Binance, Kraken) via API for seamless trading.
• Load the cryptocurrency you want to analyze and switch to the monthly chart (1M). Apply the 50 and 200 SMAs. Confirm if the 50-month SMA has crossed above the 200-month SMA.
• Switch to the weekly chart (1W) and add the RSI (14) indicator. Verify that the RSI is below 30 and showing signs of turning upward.
• Move to the daily chart (1D) and scan for the most recent candle with a long lower shadow, ideally on high volume.
• Once all three conditions are met, place a limit buy order slightly above the daily candle’s close to ensure execution.
• Set a stop-loss below the recent swing low on the daily chart to manage risk.
• Use exchange order types like “Post Only” to avoid paying taker fees if using a limit order.

Ensure all data is up to date. Some exchanges may have delayed candle closures, so verify that the daily candle has fully formed before acting.

Tools and Platforms for Signal Detection

Several platforms support this multi-timeframe analysis. TradingView is the most versatile, offering customizable indicators, alerts, and integration with brokers. Set up custom alerts for each condition: one for the golden cross, another when weekly RSI drops below 30, and a third for long lower shadow detection using Pine Script. For example, a Pine Script alert for a long lower shadow might check if low < open - (high - low) * 0.7 and close > open.

Alternatively, CryptoWatch and TrendSpider offer automated pattern recognition. Bybit and Binance have built-in technical analysis tools, though less flexible than TradingView. For backtesting, use BacktestZone or Pine Script strategies to simulate how this setup would have performed historically.

Risk Management and Trade Execution

Even with a strong signal, risk must be controlled. Allocate only a small portion of your portfolio—5% to 10%—to any single trade. Calculate position size based on your stop-loss distance. For instance, if you’re willing to risk $100 on a trade and your stop is 10% below entry, your total position should be $1,000.

Use dollar-cost averaging (DCA) if the signal appears over multiple days. Instead of buying all at once, split the purchase across two or three entries as the conditions persist. This reduces exposure to false signals. Also, monitor on-chain metrics like exchange outflows or whale movements to add confidence to the technical setup.

Avoid overtrading. This signal combination may occur only once every few years for major assets. Patience is key. Wait for full confirmation across all timeframes before acting.

Frequently Asked Questions

What if the monthly golden cross hasn’t fully closed but the weekly RSI is already oversold?

Wait for the monthly candle to close. Premature entry risks false signals. The golden cross must be confirmed on a completed monthly candle. Use the waiting period to prepare your order and analyze volume trends.

Can I use a different RSI period instead of 14 for the weekly chart?

Yes, but changing the period alters sensitivity. A shorter period like 9 makes RSI more volatile and prone to false oversold signals. A longer period like 21 smooths the data but may delay the signal. Stick to 14-period RSI for consistency with market standards.

How do I define “long” lower shadow quantitatively?

A lower shadow is considered long when its length is at least 2 times the body of the candle. Calculate it as: lower_shadow = low - min(open, close) and body = |open - close|. If lower_shadow >= 2 * body, the condition is met.

Does this strategy work on altcoins with less than 50 months of data?

No. Coins launched after 2018 won’t have enough history for a 50-month SMA. This strategy is only viable for established cryptocurrencies like BTC, ETH, BNB, and XRP. For newer coins, adjust the timeframes or exclude the monthly golden cross condition.