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Inauspicious signs for the third time in 21 years, US market in ‘death cross’ zone! – What is Death Cross Nasdaq produces Death Cross on Chart third time in Last 21 Years tutd

Story Highlights

  • Investors consider ‘death cross’ formation inauspicious
  • Bad sign for the first time in two years

The trading chart pattern of Nasdaq Composite Index came in ‘Death Cross’ formation on Friday. Investors in the stock market consider this pattern to be inauspicious. This is considered a sign of decline.

Past data shows that the ‘Death Cross’ chart pattern tends to be very heavy on the stock market for some time and it takes a significant amount of time for the market to break out of it. However, it is still unclear whether this formation is going to bother the traders more in the coming times or it will be just a matter of days.

Bad sign for the first time in two years
Earlier in April, 2020, Nasdaq came in death cross formation. That time was different. Due to the Corona epidemic, there was uncertainty all around. Investors did not understand how long this decline was going to last. Now the uncertainty has reduced to a great extent. In such a situation, due to the death cross formation of the market, there is a kind of restlessness among the investors.

There has been a lot of decline since November
The Nasdaq Composite Index fell 1.2 percent on Friday. Nasdaq was at a very high level on November 19, 2021. Since then, it has declined by about 16 per cent.

Know about the Death Cross Pattern
It is related to the trading pattern of the stock market. When a particular type of pattern is formed on the chart, it is called death cross pattern. This pattern is formed on the chart when the 50 day moving average of the index falls below the 200 day moving average. After the formation of a death cross pattern, investors become cautious as they believe that the stock market may continue to decline for a long time.

The market crashed in the year 2000 when the Death Cross was formed.
In the month of June 2000, a similar death cross pattern was formed on the New York Stock Exchange. At that time the shares of dotcom companies had fallen badly. A similar death cross pattern was seen in January 2008 as well. After this there was an economic crisis all over the world.

Due to these reasons the decline is coming
Amid weak global cues and Russia-Ukraine tensions, the stock markets around the world, including the Indian stock markets, have also been witnessing a decline for some time. Talking about the Indian markets, heavy selling by foreign institutional investors has also been a reason. The BSE Sensex has lost 2.28 per cent since the beginning of this year, while the Nifty has lost 1.98 per cent.

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