What is a Death Cross?

What is a Death Cross?

A death cross occurs when a short-term moving average crosses below a long-term moving average, signaling potential downside momentum. The classic version uses the 50-day average crossing below the 200-day average.

Key Points

• Trend confirmation: Works best in conjunction with price breaking support.
• Lagging indicator: It confirms a trend change rather than predicting it.
• Timeframe choice: Daily charts are standard, but traders adapt to 4-hour or weekly as needed.
• Volume filter: Rising volume on the crossover strengthens the signal.

Trade Management

• Entry: Enter short positions after the crossover and a break of recent support.
• Stop placement: Above the recent swing high or moving average.
• Targeting: Use measured moves or trailing stops to ride extended declines.
• Combine with fundamentals: Align with bearish macro trends for higher conviction.