Death Cross: The chart formation that warns traders about the trouble ahead

A perfect Death Cross is usually followed by a long-term downtrend that might last even for a year

The 'Death Cross' is a technical pattern that signals negative sentiment and weakness in securities. This price-average-based indicator comprises moving averages and highlights the relevance of their convergence.

Investors rely heavily on the support and resistance of major daily moving averages (DMAs), like 200-DMA, as these levels have a great significance in determining the sentiment of the stock markets. Stocks or indices trading above significant moving averages show a positive bias and tend to continue with a bullish outlook in the future.

Conversely, securities trading below moving averages tend to be weak and are likely to decline further. Market participants consider these