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The above have been bearish chart patterns to look out for. However, there are also bearish indicators and overlays to be on alert for as well. One of the classic ones out there is known as the death cross. This one is the opposite of the golden cross we covered previously. A death cross is traditionally a spot where you mark the end of your gains. Of course, this also is not always the case. Especially in a new emerging sector such as cannabis. Nonetheless, there are some negative connotations with the death cross.
What is the death cross exactly? SImply put the death cross is when the 50-day moving average crosses and goes lower than the 200-day moving average. This is signal that the shorter time frame (50) prices are dropping compared to its average over the past year (200). You should consider this only as a heads up on its own and only its own. This is not the actual death of any given stock. While it is bearish, as the moving averages are heading downwards naturally, there are plenty of things to be on the lookout for a reversal. In the example of Veritas Pharma below, we can see that it has been in a downtrend ever since the death cross, however, if the downwards resistance line illustrated below were to be broken upwards we would look to combine that with our other indicators to consider adding to or starting a position. Don’t let the Death cross be the death of your gains. Be on the lookout for it combined with other indicators and patterns and protect your profits.
Death Cross
Note: this is a US stock for those looking to diversify