The death cross is a technical analysis chart pattern used in stock trading that occurs when the 50-day moving average of a stock price crosses below the 200-day moving average. This signals a bearish trend in the stock's price and may indicate a potential sell-off or price decline.
Moving averages are commonly used in technical analysis to identify trends in a stock's price. The 50-day moving average represents the average closing price of the stock over the past 50 trading days, while the 200-day moving average represents the average closing price over the past 200 trading days. The death cross occurs when the 50-day moving average falls below the 200-day moving average, which may indicate that the stock's price has been on a downward trend for a sustained period.
Traders and investors may use the death cross as a signal to sell their positions or to avoid buying new positions in the stock. However, it is important to note that technical analysis tools such as the death cross are not always reliable and should be used in conjunction with other indicators and analysis methods to make informed trading decisions.