By the sound of it, the “death cross” would seem a circumstance that investors should avoid. To be fair, that such a pattern emerged is a clear warning sign that not all is well with the underlying asset or enterprise. Nevertheless, because the death cross is a heavily monitored phenomenon, swing traders have an opportunity to leverage it for potentially quick profits.
Let’s start with the definition. A death cross describes a situation where a shorter-running moving average slips beneath a longer-running one, typically the 50-day moving average intersecting below the 200 DMA. Based on mathematical deduction, a publicly traded security would need to incur sustained downside for this negative cross to materialize.
