7.18What is the 200-day moving average?
1What is it?
The 200 DMA is the average close of the last 200 trading days (about 10 months), the classic long-term trend line.
2Why does it exist?
Many investors consider a stock above a rising 200 DMA to be in a long-term uptrend. A golden cross (50 DMA crossing above 200 DMA) is seen as bullish; a death cross (crossing below) as bearish.
3Quick revision
- ~10 months average.
- Long-term trend.
- Golden cross / death cross.
4Knowledge check
Q1. What is a golden cross?Show answer
50 DMA crossing above the 200 DMA.
Q2. What is a death cross?Show answer
50 DMA crossing below the 200 DMA.
Q3. Are these crosses guaranteed signals?Show answer
No. They lag and can give false signals.