A security guard stands behind a glass facade displaying the CNX Nifty logo at the National Stock Exchange in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Nifty’s Moving Averages Poised For A ‘Death Cross’

A death cross is a term used in technical analysis to indicate the long-term moving average (usually the 200-day moving average) of a security breaking above its short-term moving average (usually the 50-day moving average).

This generally happens when the security falls sharply in a short period. Most chartists consider the death cross as a precursor for further losses.

So why are we talking about the death cross?

Well, the NSE Nifty 50 Index has meaningfully made this crossover only twice in the last five years. In August 2013, the index corrected 7 percent after the averages crossed, while in June 2015, the Nifty fell 2 percent after the death cross.

The index is now poised to make that crossover for the first time in 18 months. If it does indeed happen, the Nifty could fall further.

That’s today’s chart of the day.

BloombergQuint