Definitely and because many traders and trading programs pay close attention to their level, reactions on their tests almost become self-fulfilling. By that we mean, should an index or stock correct into a key moving average, the machines kick in, placing buy orders, pushing the price back up. What is a moving average? A line …
A divergence where an indicator has failed to confirm a new price high and is starting to roll-over, implying a tired uptrend. Indicators where negative divergences are most effective include the 14-day RSI, MACD, on-balance-volume, relative ratio, as well as breadth studies. Apple (AAPL) has struggled the past two weeks, underperforming the broader market. The chart exhibits a bearish momentum divergence. By that we mean the …
A death cross is a shorter term moving average, typically the 50-day, cuts down through the slower average, traditionally the 200-day. False signals are common, therefore other technicals should be consulted. British banking group Lloyds (LYG) generated a Death Cross last week with the 50-day exponential moving average slipping under the 200-day. The previous signal of the same type …
What is a “Death Cross”? A worked example looking at Lloyds (ADR) Read More »
