What does the term "Golden Cross" refer to in technical analysis?

The term "Golden Cross" in technical analysis specifically refers to the bullish crossover that occurs when the short-term moving average, typically the 50-day, rises above the long-term moving average, often the 200-day. This event is regarded as a strong signal that the security's price is likely to continue upward, indicating potential for an uptrend.

The rationale for its significance lies in the relationship between short-term and long-term price trends. When the shorter moving average crosses above the longer one, it suggests growing momentum and bullish sentiment among investors, thereby increasing the likelihood of price appreciation. This crossover is often used by traders to identify entry points for buying a security.

Understanding this concept is crucial for traders seeking to capitalize on market movements, as the Golden Cross is considered a reliable indicator of a potential new bullish phase in a stock or market index.