Is the second golden cross below the zero axis of MACD more reliable?

A second golden cross below the zero axis on the MACD chart may signal a potential bullish reversal in cryptocurrencies like Bitcoin or Ethereum, especially after prolonged downtrends.

Jul 02, 2025 at 06:08 am

Understanding the MACD Indicator

The Moving Average Convergence Divergence (MACD) is a popular technical analysis tool used by traders to identify potential buy and sell signals. It consists of three main components: the MACD line, the signal line, and the MACD histogram. The MACD line is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA. The signal line is typically a 9-period EMA of the MACD line, and the histogram represents the difference between these two lines.

When analyzing price trends in cryptocurrency markets, traders often rely on MACD crossovers to determine momentum shifts. A golden cross occurs when the MACD line crosses above the signal line, suggesting a potential bullish trend. Conversely, a death cross happens when the MACD line crosses below the signal line, indicating bearish momentum.

What Is a Golden Cross Below the Zero Axis?

A golden cross below the zero axis refers to a situation where the MACD line crosses above the signal line while both remain below the zero line on the MACD chart. This indicates that although there's a shift toward positive momentum, the overall trend is still bearish because the MACD line hasn't yet crossed into positive territory.

This type of golden cross can be misleading for novice traders since it appears bullish but occurs in a downtrend. However, some analysts argue that if this pattern forms after a significant decline and repeated tests of support levels, it could suggest that selling pressure is waning and buyers are beginning to step in.

Why Do Traders Consider the Second Golden Cross More Reliable?

In technical analysis, repetition of patterns can sometimes increase their reliability. A second golden cross refers to a scenario where the MACD line crosses above the signal line for the second time within a short period. If this second crossover occurs below the zero axis, some traders believe it reinforces the likelihood of a reversal or at least a stronger pullback in price.

The rationale behind this belief lies in the idea that multiple crossovers below the zero axis indicate consistent accumulation by buyers despite ongoing bearish sentiment. Each crossover may represent a failed attempt by bears to push the price lower, leading to increased chances of a bullish breakout once the MACD line finally crosses above the zero axis.

How to Identify a Second Golden Cross Below Zero in Cryptocurrency Charts

To spot a second golden cross below the zero axis, follow these steps:

• Open a candlestick chart on your preferred trading platform (e.g., TradingView or Binance).
• Add the MACD indicator with default settings (12, 26, 9).
• Look for the first instance where the MACD line crosses above the signal line while both are below zero.
• Wait for the MACD line to fall back below the signal line again.
• Observe whether the MACD line makes another move upward and crosses above the signal line a second time, still remaining below zero.

This formation is particularly relevant in cryptocurrencies like Bitcoin or Ethereum, where strong corrections often lead to extended periods of consolidation before a new trend emerges. In such cases, the second golden cross might serve as an early warning sign for a potential reversal.

Does This Signal Work Consistently Across All Crypto Assets?

Not all cryptocurrencies react similarly to technical indicators. High-volume assets like BTC and ETH tend to exhibit more reliable patterns due to deeper liquidity and broader market participation. Smaller-cap altcoins, however, may show erratic behavior in their MACD readings due to low volume and manipulation risks.

Traders should also consider timeframe sensitivity. A second golden cross observed on a daily chart may carry more weight than one seen on a 1-hour chart. For best results, combine this signal with other tools such as volume analysis, support/resistance levels, or moving averages to filter out false positives.

Common Pitfalls When Relying on the Second Golden Cross

Despite its appeal, relying solely on the second golden cross below the zero axis can be risky. One major pitfall is confirmation bias, where traders look for patterns that fit their expectations while ignoring contradictory data. Another issue is lagging signals, as MACD is based on moving averages and may not always capture rapid price movements in volatile crypto markets.

Additionally, many traders fall into the trap of entering positions too early without waiting for confirmation from other indicators or price action. To avoid this, it’s advisable to wait until the MACD line crosses above the zero axis or until there’s a clear break above a key resistance level before committing capital.

Frequently Asked Questions

Q1: Can the second golden cross occur above the zero axis?

Yes, though it is less commonly emphasized. A second golden cross above the zero line typically suggests continued strength in an uptrend rather than a reversal.

Q2: Should I use different MACD settings to improve accuracy?

Some traders adjust the MACD parameters (e.g., faster EMAs) to make it more responsive, especially in fast-moving crypto markets. However, doing so increases the risk of false signals.

Q3: How long should I wait after the second golden cross before taking action?

There's no fixed rule, but many traders wait for a full candlestick close above a key level or for the MACD line to rise above zero before entering a trade.

Q4: Are there any alternative indicators that work well with MACD for confirming reversals?

Yes, combining MACD with the Relative Strength Index (RSI) or Bollinger Bands can help confirm overbought/oversold conditions and strengthen reversal signals.