Death Cross! This is one such topic that’s been discussed in a wide range today. But you might have come across questions like,
What is this death cross? How does it happen? How do you calculate it?
Then you’re at the right place. This article will help you understand all about death cross in a much simpler way
What is Death Cross?
Death Cross is a technical measure indicating a more bearish trend to come.
Analysts use the term death cross to check & analyze the future of an Asset so that they can take better decisions on their next trade
Now let’s understand how to calculate this death cross and how it happens exactly.
Step 1: Open Trading View website
Step 2: In the search box, for example, search BTC/USDT, and a chart opens
Step 3: Now select the indicators option & search Moving Average (MA) and select MA twice
Step 4: Set the 1st MA as 50 days along with a colour & 2nd MA as 200 days with a different colour.
Now you can see that the asset’s average price over the last 50 day moving average falls below the 200-day moving average and the point where a cross or X shaped line forms, it’s called a death cross
FYI : Moving Average is a technical indicator used by analysts and investors to determine the average price of an asset
Opposite Of Death Cross? Golden Cross!!
In Golden Cross the Red Line indicating 50 days MA goes above Blue Line indicating 200 days MA
Golden Cross Occurs In Three Stages:
Stage 1: The 50-day moving average is below the 200-day moving average
Stage 2: You can see the trend reverses and the 50-day moving average crosses above the 200-day moving average. This is the phase where Golden Cross occurs
Stage 3: The start of the bullish moment – 50-day moving average stays above the 200-day moving average indicating a Bullish trend
So by now, you have understood the difference between the death cross and the golden cross, wherein the major difference lies in the death cross being downtrend and the latter being uptrend.
But there are a few tips one must look into before considering the death cross and golden cross
- It is always recommended to find a balance between both the trends, never rush.
- Both these crosses are not final, before investing consider other indicators as well
- Investors should also take stop-loss into consideration before making any investment decisions. As a long-term trader you should always maximize profit while minimizing your loss
No matter whether you decide to buy or sell, always research well before entering or exiting the market to have control over your profits or loss.