Traders use the death cross to seek long-term bear market profits, either by using it to identify an entry point into the market or to identify a major resistance level for future market trading. The death cross, which is defined as a major short-term moving average crossing to the downside of a major long-term moving average, is considered one of the most significant technical trading indicators of a bear market. It is almost universally recognized across all investing markets, including stocks, futures and forex trading. In stock market trading, it is used in the analysis of individual stocks and major market indexes.

The death cross usually only occurs some time after a market has already turned from an uptrend to a downtrend. It is more of an ongoing trend indicator than an identifier of a market top. Many traders consider the death cross to be a very strong, reliable indicator that confirms a market's probable direction for the intermediate or long-term future. Trend traders frequently use it to profit from following a market trend that extends for a significant period of time and involves a significant change in a market's price level.

The market price level at which the death cross moving average crosses over is marked by traders as a level of major resistance for the market. As long as the bear market trend continues, the price does not move above that level again once the death cross has occurred. Traders often choose a price point just a bit above the death cross price level to place a stop-loss order on a sell trade.

While the death cross is a major technical trading indicator utilized by many market analysts and traders, writers for Forbes and other financial publications have often questioned the validity of the death cross, pointing out that it is nowhere close to being 100% reliable in forecasting future market direction.

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