In technical trading, moving averages are foundational tools that help traders identify trends, determine entry and exit points, and assess the momentum of a security. Among the most trusted signals in this area is the Golden Cross—a bullish crossover pattern that can signify the beginning of a strong upward trend.
But not all golden crosses are created equal. One particular setup has caught the attention of serious traders: the golden cross of the 5-day and 10-day moving averages when the 60-day moving average is also trending upward. This triple-layered strategy provides not only strong confirmation but also helps traders align with the broader momentum of the market.
In this article, we’ll break down the key principles of this strategy, how to use it, and what to watch out for to increase your chances of success.
Understanding the Moving Averages
Before diving into the strategy, let’s recap the role of each moving average involved:
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5-Day Moving Average (MA): A very short-term trend indicator, used by traders to spot quick shifts in price momentum.
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10-Day Moving Average: Slightly more stable than the 5-day MA, it acts as a short-term filter to smooth out minor fluctuations.
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60-Day Moving Average: A medium-term trend indicator. When this line moves upward, it reflects a consistent longer-term bullish sentiment.
When all three of these moving averages align in a particular pattern, the results can be powerful.
What Is a Golden Cross?
A golden cross occurs when a shorter-term moving average crosses above a longer-term moving average. For instance, a traditional golden cross happens when the 50-day MA crosses above the 200-day MA.
However, in the 5-10-60 setup, we are focusing on:
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The 5-day MA crossing above the 10-day MA (signaling near-term momentum),
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While the 60-day MA is already trending upward (indicating mid-term bullish strength).
This combination is especially attractive for swing traders and medium-term investors who want early entries while staying within the broader trend.
1. Why the 60-Day MA’s Direction Matters
The first major condition in this strategy is that the 60-day moving average must be trending upward. This is crucial.
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A rising 60-day MA suggests that the market has been in a sustained uptrend for the past 2-3 months.
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This condition acts as a trend filter—ensuring you're not jumping into a false rally or a short-lived spike.
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When the 5-day and 10-day MAs form a golden cross on top of a rising 60-day MA, it confirms strong market alignment across timeframes.
✅ Key takeaway:
Never ignore the slope of the 60-day MA. An upward slope adds weight to the golden cross and signals market confidence.
2. Focus on the Last Three Golden Crosses
In backtesting and real-time analysis, it's often observed that the last three golden crosses are particularly strong indicators.
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If each of the last three golden crosses resulted in a price rally, the fourth may be a continuation.
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The consistency of successful golden crosses builds trust in the trend.
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More importantly, if each cross occurred at a higher price level than the last, it suggests the stock or asset is forming a healthy ascending channel.
✅ Key takeaway:
Study the recent history of golden crosses. A pattern of successful breakouts increases the likelihood of a new one following through.
3. Retracement Rules: Keep It Shallow, Keep It Healthy
While the golden cross is a bullish signal, not every price pullback is bearish. However, shallow retracements with declining volume are key signs of a healthy market.
When the price retraces before or shortly after a golden cross:
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The price should not fall too deeply into previous support zones.
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Volume should contract, indicating that the pullback is not driven by strong selling pressure.
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This gives the moving averages time to align properly, creating “ventilation” or spacing between the 5-day, 10-day, and 60-day MAs.
This visual separation between MAs suggests a strong and orderly trend. The price is not compressed or choppy but moving in a clean upward path.
✅ Key takeaway:
Look for shallow, low-volume retracements. They indicate trend continuation, not trend reversal.
4. Higher Highs: Each Golden Cross Should Occur at a Higher Level
One powerful feature of a sustainable uptrend is the formation of higher highs and higher lows.
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When each golden cross occurs at a price higher than the previous one, this confirms a strong upward channel.
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This “laddering effect” ensures that the trend is not just a single spike, but part of a larger, structured move.
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You can visualize this as a staircase—each golden cross forms another “step” higher.
This is especially important for position sizing and scaling into trades. It allows for pyramid-style entries where each position builds on a profitable base.
✅ Key takeaway:
Only trust golden crosses that happen at successively higher price levels. That’s how lasting trends are built.
5. The Unbreakable Rule: Don’t Short When All Three MAs Are Rising
Perhaps the simplest yet most powerful rule in this strategy is this:
“Don’t short if the 5-day, 10-day, and 60-day moving averages are all rising.”
This is where traders often go wrong. They try to “catch the top” or anticipate a correction in a rising market. However:
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When all three MAs are moving upward, the path of least resistance is still up.
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Shorting against this setup is like swimming upstream—painful, slow, and dangerous.
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Even if a pullback does occur, the underlying trend is still bullish, making it hard for short positions to gain traction.
✅ Key takeaway:
Respect the trend. If all three moving averages are rising, your bias should be long or neutral—never short.
How to Trade the 5-10-60 Golden Cross Strategy
Here’s a step-by-step guide to executing this strategy effectively:
✅ Step 1: Setup Screening Conditions
Use your trading platform or charting software to screen for:
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A golden cross between the 5-day and 10-day MAs.
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The 60-day MA sloping upward.
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Price pullbacks with shrinking volume.
✅ Step 2: Confirm the Trend
Ensure:
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Recent golden crosses have resulted in upward movement.
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Each cross is at a higher level than the previous.
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The 3 MAs show visible spacing (“ventilation”).
✅ Step 3: Plan Entry
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Look for entries during low-volume pullbacks after the golden cross.
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Enter within a predetermined buy zone just above the 10-day MA.
✅ Step 4: Risk Management
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Use the 60-day MA as your trend stop.
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Alternatively, place a tight stop-loss just below the recent swing low if you're trading shorter-term.
✅ Step 5: Let Profits Run
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If the trend continues, scale in as more golden crosses appear.
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Only consider exiting when:
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Price diverges from moving averages drastically.
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All MAs start flattening or turning down.
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There’s a significant volume spike with a reversal candle.
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Why This Strategy Works
The magic of this strategy lies in its multi-timeframe confirmation:
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Short-term MAs (5 and 10-day) capture quick momentum.
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The 60-day MA acts as a trend filter to avoid whipsaws.
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Volume analysis and higher highs protect you from entering weak setups.
Instead of relying on guesswork or gut feel, this strategy offers structure, clarity, and consistency—everything a trader needs to make informed decisions.
Final Thoughts: Discipline Over Prediction
Trading is not about predicting the future. It's about following a repeatable process that gives you an edge over time. The 5-10-60 golden cross setup doesn't promise overnight riches, but it keeps you on the right side of the market, especially when trends are strong.
So, next time you’re scanning for trading opportunities, remember this:
A rising 60-day MA is your best friend. When the 5-day and 10-day cross over with strength and structure, don’t hesitate—ride the wave.
If you’re serious about using this strategy, consider backtesting it on your preferred stocks or indices. Monitor trade setups, entry zones, and outcomes. The more data you collect, the stronger your conviction will become.
Trade your plan, follow the trend, and let the moving averages guide your way.
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