How to follow up the monthly moving average golden cross + weekly KD low passivation + daily line with large volume and long positive?

The monthly golden cross, weekly KD low passivation, and high-volume daily bullish candle together signal a strong, multi-timeframe buy setup in crypto.

Jul 29, 2025 at 08:57 pm

Understanding the Monthly Moving Average Golden Cross

The monthly moving average golden cross is a long-term bullish signal in technical analysis. It occurs when the shorter-term moving average (commonly the 50-month MA) crosses above the longer-term moving average (typically the 200-month MA). This crossover suggests a shift in long-term momentum from bearish to bullish. For cryptocurrency traders, this signal is particularly significant because it often precedes extended bull runs, especially in assets like Bitcoin and Ethereum.

To identify this signal, you need to plot both the 50-month and 200-month simple moving averages (SMA) on the monthly candlestick chart of your chosen cryptocurrency. When the 50-month MA line moves above the 200-month MA and remains above it for at least one full month, the golden cross is confirmed. It’s crucial to wait for full monthly candle closure to avoid false signals from intra-month volatility.

Traders should note that while the golden cross is a strong indicator, it works best when combined with other confirmatory signals. A standalone golden cross may lead to delayed entries, as it often occurs after a significant price increase has already begun. Therefore, it's essential to use it in conjunction with weekly and daily indicators such as the KD oscillator and volume analysis.

Interpreting Weekly KD Low Passivation

The KD indicator (Stochastic Oscillator) measures momentum by comparing a cryptocurrency’s closing price to its price range over a specific period. On the weekly chart, low passivation of the KD refers to a situation where the %K and %D lines remain near the oversold region (typically below 20) for an extended period, indicating sustained selling pressure has exhausted.

Low passivation becomes a bullish signal when the %K line crosses above the %D line from the oversold zone. This suggests that downward momentum is weakening and buyers may soon take control. To use this effectively:

• Open the weekly chart of the cryptocurrency.
• Apply the KD indicator with standard settings (14,3,3).
• Observe whether both %K and %D have been below 20 for at least 2–3 consecutive weeks.
• Confirm the passivation breakout by checking if %K crosses above %D while still in the oversold area.

This signal is especially reliable when it coincides with the monthly golden cross, as it reflects both long-term trend reversal and short-term momentum recovery. Volume confirmation during the weekly KD crossover increases the validity of the signal.

Analyzing Daily Candles with Large Volume and Long Positive Bars

Once the monthly and weekly conditions are met, the daily chart provides the final entry trigger. A long positive candle with significantly higher volume indicates strong buying pressure and potential breakout momentum.

To analyze this pattern:

• Monitor the daily candlestick chart after the golden cross and weekly KD passivation are confirmed.
• Look for a green (positive) candle where the body length is at least 3–5 times larger than the average of the previous five daily candles.
• Ensure that the trading volume is at least 1.5 to 2 times higher than the 20-day average volume.
• The candle should close near its high, indicating strong buyer control throughout the session.

This pattern suggests institutional or large retail participation, which often drives sustained price increases. It's important to avoid entering on the candle’s formation; instead, wait for the daily candle to close to prevent false breakouts. The combination of high volume and a long bullish body acts as a confirmation that the market sentiment has shifted decisively.

Step-by-Step Strategy for Entry and Confirmation

To effectively follow this multi-timeframe strategy, traders should execute the following steps in sequence:

• Verify the monthly 50 MA has crossed above the 200 MA and the crossover candle has closed.
• Switch to the weekly chart and confirm the KD lines have been in the oversold zone (below 20) for multiple weeks.
• Wait for the %K line to cross above the %D line within the oversold region on the weekly chart.
• Move to the daily chart and monitor for a large green candle with volume significantly above average.
• Only enter a long position after the daily candle closes with strong bullish characteristics.
• Set a stop-loss slightly below the low of the large positive candle to manage risk.
• Use on-chain data or order book depth from exchanges like Binance or Bybit to validate the volume authenticity.

This layered approach ensures that entries are based on confluence across multiple timeframes, reducing the likelihood of false signals. Each condition acts as a filter, increasing confidence in the trade setup.

Managing Risk and Position Sizing

Even with strong technical signals, risk management is critical in cryptocurrency trading due to high volatility. After identifying the setup, determine position size based on account risk tolerance.

• Allocate no more than 1–2% of total capital per trade to preserve long-term sustainability.
• Place the stop-loss at a logical technical level, such as below the recent swing low or the base of the large positive candle.
• Consider using a trailing stop once the price moves favorably to lock in profits.
• Avoid adding to the position unless there is clear continuation on increasing volume.
• Monitor for whale wallet movements via tools like Glassnode or Nansen to detect potential reversals.

Volatility spikes are common in crypto markets, so using limit orders instead of market orders helps avoid slippage during entry. Also, ensure your exchange supports the asset with sufficient liquidity to execute the trade smoothly.

Frequently Asked Questions

What if the monthly golden cross appears but the weekly KD hasn’t passivated yet?

Wait for the weekly KD to show signs of reversal. A golden cross without supporting momentum indicators may result in a weak rally. The alignment of both signals increases the probability of a sustained uptrend.

Can this strategy be applied to altcoins?

Yes, but with caution. Major altcoins like Solana, Cardano, or Polkadot may exhibit similar patterns, but their moving averages and volume behavior are noisier. Always verify liquidity and historical price behavior before applying this strategy.

How do I confirm that the volume on the daily candle is genuine?

Compare the volume with the 20-day average. Use exchange-specific volume data and cross-check with on-chain transaction volume if available. Avoid assets with known pump-and-dump history where volume can be manipulated.

Should I use leverage when trading this setup?

Leverage increases both reward and risk. Given the long-term nature of the golden cross, using high leverage can lead to liquidation during normal pullbacks. If used, keep leverage below 3x and ensure adequate margin buffer.