What is a death Cross in stock trading?

A death cross is a chart pattern used in stock trading (as well as index funds, commodities, and cryptocurrency trading) in which a short-term (e.g., 50-day) moving average (MA) crosses below a long-term (200-day) moving average. It reflects recent price weakness and signals a new bearish long-term trend in the market.

When is a stock 'dead'?

In short, traders who believe in the pattern’s reliability say that a security is “dead” once this bearish moving average crossover occurs. The death cross is the exact opposite of another chart pattern known as the golden cross. The golden cross occurs when the 50-day moving average of a stock crosses above its 200-day moving average.

Is the death cross a market milestone?

Despite its ominous name, the death cross is not a market milestone worth dreading. Market history suggests it tends to precede a near-term rebound with above-average returns. The death cross appears on a chart when a stock’s short-term moving average, usually the 50-day, crosses below its long-term moving average, usually the 200-day.

What is a death cross & a golden cross?

The death cross is the exact opposite of another chart pattern known as the golden cross. The golden cross occurs when the 50-day moving average of a stock crosses above its 200-day moving average. The golden cross, in direct contrast to the cross of death, is a strong bullish market signal, indicating the start of a long-term uptrend.