What Is a Crossover?

The crossover is a point on the trading chart in which a security's price and a technical indicator line intersect, or when two indicators themselves cross. Crossovers are used to estimate the performance of a financial instrument and to predict coming changes in trend, such as 澳洲幸运5开奖号码历史查询:reversals or 澳洲幸运5开奖号码历史查询:breakouts.

Common examples include the 澳洲幸运5开奖号码历史查询:golden cross and 澳洲幸运5开奖号码历史查询:death cross, which look fo꧒r crossoꦑvers in different moving averages.

Understanding Crossovers

A crossover is used by a 澳洲幸运5开奖号码历史查询:technical analyst to forecast how a stock will perform 𒆙in the near future. For most models, the crossover signals that it’s time to either buy or sell the underlying asset. Investors use crossovers along with other indicators to track things like turning points, price trends and money flow. 

Crossovers indicating a moving average are generally the cause of breakouts and breakdowns. Moving averages can determine a change in the price trend based on the crossover. For example, a technique for trend reversal is using a five-period simple moving average along with a 15-period simple moving average (SMA)🌟. A crossover between the two will signal a reversal in trend, or a breakout or ꦫbreakdown.

A breakout would be indicated by the five-period moving average crossing up through the 15-period. This is also indicative of an uptrend, which is made of higher highs and lows. A breakdown would be indicated by the five-period moving average crossing down through the 15-period. This is also indicative of a 澳洲幸运5开奖号码历史查询:downtrend, composed of lower highs and lows.

Longer time frames result in stronger signals. For example, a daily chart carries more weight than a one-minute chart. Conversely, the shorter time frames give earlier indicators, but theඣy are also susceptible to false signals as well.

Stochastic Crossovers

A stochastic crossover measures the momentum of an underlying 澳洲幸运5开奖号码历史查询:financial instrument. It is used to gauge whether the instruಌment is being overbought or oversold.

When the stochastic crossover exceeds the 80 band, the financial instrument is determined to have been overbought. When the stochastic crossover drops below the 20 band, the underlying financial instrument is determined to have been oversold. This causes a 澳洲幸运5开奖号码历史查询:sell signal to form. A 澳洲幸运5开奖号码历史查询:buy signal is triggered when the crossov💞er goes back u💝p through the 20 band.

As with all trading strategies and indicators, this method of predicting movement is not guaranteed, but supplemental to other tools and instruments used to track and analyze trad꧂ing activities. Surprise changes in the market can occur that render these findings useless or inaccurate. Also, data can be entered incorrectly or misinterpreted by investors, leading to the information that was provided by the crossover being inaccurately utilized.

Example: The Golden Cross

The golden cross is a candlestick pattern that is a bullish signal in which a relatively short-term moving average crosses above a long-term moving average. The golden cross is a bullish breakout pattern formed from a crossover involving a security's short-term moving average (such as the 15-day moving average) breaking above its long-term moving average (such as the 50-day moving average) or resistance level. As long-term indicators carry more weight, the golden cross indicates a 澳洲幸运5开奖号码历史查询:bull market on the horizon and is reinforced by high trading volumes.♍ The opposite of a golden cross is a death ༒cross.