What is the significance of the second golden cross below the zero axis? What are the signals of a strong trend?

The second golden cross below the zero axis signals a strengthening bullish trend in crypto, even in negative territory, guiding traders to potential entry points.

Jun 09, 2025 at 05:14 pm

The second golden cross below the zero axis in the context of cryptocurrency technical analysis refers to a significant bullish signal that occurs when a shorter-term moving average (MA) crosses above a longer-term moving average, but this time, both are positioned below the zero line on a momentum indicator such as the MACD (Moving Average Convergence Divergence). This event can signal the beginning of a new upward trend or the strengthening of an existing one, even though the asset is still in a negative territory. Understanding the implications of this occurrence, as well as recognizing other signals of a strong trend, is crucial for traders and investors looking to maximize their potential gains in the crypto market.

Understanding the Golden Cross

A golden cross is a technical chart pattern that indicates a potential bullish trend reversal. It happens when a short-term moving average, such as the 50-day MA, crosses above a long-term moving average, such as the 200-day MA. This crossover suggests that the asset's price momentum is shifting from bearish to bullish. The significance of this event increases when it occurs below the zero axis on a momentum indicator, as it indicates that the asset is beginning to recover from a downtrend.

The Second Golden Cross Below the Zero Axis

The second golden cross below the zero axis is a more nuanced signal. It suggests that after an initial bullish signal (the first golden cross), the asset experienced a period of consolidation or minor pullback but has now regained enough momentum to cross above the longer-term moving average again. This second occurrence below the zero line indicates that the bullish trend is gaining strength, even though the asset is still in negative territory on the momentum indicator.

Signals of a Strong Trend

Identifying a strong trend in cryptocurrency trading involves recognizing various technical indicators and patterns. Here are some key signals that suggest a strong trend:

• Volume Increase: A significant increase in trading volume often accompanies the start of a strong trend. High volume indicates strong interest and commitment from traders, which can sustain the trend.
• Price Breakouts: A breakout from a consolidation pattern, such as a triangle or a rectangle, with high volume, is a strong indication of a new trend. The breakout should be accompanied by a clear move above resistance levels for an uptrend or below support levels for a downtrend.
• Moving Average Crossovers: As mentioned, golden crosses (short-term MA crossing above long-term MA) signal potential bullish trends, while death crosses (short-term MA crossing below long-term MA) indicate bearish trends. The strength of these signals increases with the distance between the moving averages after the crossover.
• Trendline Confirmation: A trendline drawn along the highs or lows of price action can confirm a trend. An uptrend is confirmed when the price consistently stays above an ascending trendline, while a downtrend is confirmed when the price remains below a descending trendline.
• Momentum Indicators: Indicators like the MACD and the Relative Strength Index (RSI) can help confirm the strength of a trend. A rising MACD line and a bullish divergence on the RSI are signs of a strong uptrend, while a falling MACD line and a bearish divergence on the RSI indicate a strong downtrend.

Using the Second Golden Cross in Trading

Traders can use the second golden cross below the zero axis as a signal to enter a long position or to add to an existing position. Here are the steps to effectively use this signal:

• Identify the First Golden Cross: Monitor the moving averages for the first golden cross below the zero axis. This initial signal indicates the beginning of a potential bullish trend.
• Observe Price Action: After the first golden cross, watch the price action for signs of consolidation or minor pullbacks. These are normal and do not necessarily negate the bullish signal.
• Confirm the Second Golden Cross: Look for the short-term moving average to cross above the long-term moving average again. This second golden cross should occur below the zero axis on the MACD or another momentum indicator.
• Check Volume and Other Indicators: Confirm the strength of the trend by checking for increased volume and other bullish signals, such as a rising MACD line and a bullish RSI divergence.
• Enter the Trade: Once the second golden cross is confirmed, consider entering a long position or adding to an existing position. Set appropriate stop-loss and take-profit levels to manage risk.

Combining Multiple Signals for Confirmation

While the second golden cross below the zero axis is a powerful signal, it is always beneficial to combine it with other technical indicators for confirmation. Here are some additional signals that traders can look for to strengthen their confidence in a strong trend:

• Candlestick Patterns: Bullish candlestick patterns, such as the hammer, engulfing, and morning star, can provide additional confirmation of a strong uptrend.
• Support and Resistance Levels: A strong trend often breaks through key support or resistance levels. Monitor these levels to confirm the strength of the trend.
• Fibonacci Retracement Levels: A strong trend often respects Fibonacci retracement levels. A price that bounces off a key Fibonacci level, such as the 61.8% level, can confirm the strength of the trend.
• Divergence on Oscillators: Bullish divergence on oscillators like the MACD or RSI can provide additional confirmation of a strong uptrend. This occurs when the price makes a lower low, but the oscillator makes a higher low.

Practical Example of the Second Golden Cross

To illustrate the concept of the second golden cross below the zero axis, consider a hypothetical scenario involving Bitcoin (BTC). Suppose that after a prolonged downtrend, the 50-day MA of BTC crosses above the 200-day MA below the zero line on the MACD, signaling the first golden cross. The price then consolidates for a few weeks before the 50-day MA crosses above the 200-day MA again, still below the zero line. This second golden cross, accompanied by increased volume and a rising MACD line, confirms a strong bullish trend. Traders could use this signal to enter a long position or add to an existing position, setting appropriate risk management levels.

Frequently Asked Questions

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

A: The second golden cross typically refers to a situation where both the short-term and long-term moving averages are below the zero line on a momentum indicator. If the second crossover occurs above the zero axis, it would indicate a different scenario, often suggesting a more established bullish trend rather than a recovery from a downtrend.

Q: How long should traders wait for the second golden cross after the first one?

A: The time between the first and second golden crosses can vary widely depending on market conditions. Traders should focus on the price action and other technical indicators rather than a specific timeframe. The key is to ensure that the second golden cross is accompanied by strong bullish signals.

Q: Is the second golden cross a reliable signal for all cryptocurrencies?

A: While the second golden cross can be a reliable signal for many cryptocurrencies, its effectiveness can vary depending on the liquidity and volatility of the specific asset. Traders should always consider the unique characteristics of each cryptocurrency and combine the second golden cross with other technical indicators for the best results.

Q: Can the second golden cross be used for short-term trading?

A: The second golden cross is generally considered a signal for medium to long-term trends. However, traders can use it for short-term trading by combining it with other short-term indicators and adjusting their risk management strategies accordingly.