Hello, Tiger! Welcome to the fifth episode of our Technical Analysis series.
Let‘s look at 6 commons patterns of MA!
1. Upward & Downward Breakouts: Releasing Market Sentiment
The Pattern: This occurs when the price candle forcibly crosses the Moving Average line after a period of interaction.
Market Logic:
Upward Breakout: The price surges above the MA. This signals that market sentiment has shifted from hesitation to conviction, breaking the "average cost" resistance.
Downward Breakout: The price plunges below the MA. This indicates panic or profit-taking, as the "average cost" support level has failed to hold.
2. Bullish & Bearish Alignment (Perfect Order): Cracking the MA Code
The Pattern: This refers to the specific ordering of multiple Moving Averages (Short, Medium, and Long-term).
Market Logic:
Bullish Alignment: Short-term MA > Medium-term MA > Long-term MA. All lines are sloping up. This confirms a strong, healthy Uptrend.
Bearish Alignment: Short-term MA < Medium-term MA < Long-term MA. All lines are sloping down. This confirms a strong, dominant Downtrend.
3. Golden Cross & Death Cross: Basic Indicator Forms
The Pattern: The intersection of a shorter-term MA and a longer-term MA.
Market Logic:
Golden Cross: The short-term MA crosses above the long-term MA. This is a classic long-term Buy Signal, suggesting momentum has shifted to the upside.
Death Cross: The short-term MA crosses below the long-term MA. This is a classic long-term Sell Signal, warning of a potential bear market.
4. Shallow & Deep Entanglement (Whipsaws): Consolidation vs. Reversal
The Pattern: The MAs are not sloping clearly but are twisting or braiding around the price.
Market Logic:
Shallow Entanglement: Often represents a brief "rest" or sideways consolidation in a trend. The market is taking a breath.
Deep Entanglement: Represents a fierce battle between buyers and sellers. The trend is undefined, and the market is deciding whether to continue or reverse. This is often a "No Trade Zone."
5. Low & High Convergence (The Squeeze): Critical Turning Points
The Pattern: Multiple MAs (Short, Medium, Long) converge tightly together at a specific price level, appearing "glued" or "sticky."
Market Logic:
Low-Level Convergence: MAs bunch together at price lows. This implies volatility compression and accumulation; a violent upward explosion is often imminent.
High-Level Convergence: MAs bunch together at price highs. This implies distribution; the market is running out of steam and a downward collapse may follow.
6. Divergence: Short-Bull/Long-Bear & Short-Bear/Long-Bull: Rationalizing Conflicting Signals
The Pattern: The short-term trend contradicts the long-term trend (e.g., Short-term MA is rising, but Long-term MA is falling).
Market Logic:
Short-Bull / Long-Bear: This is usually a "correction" or rally within a larger downtrend. It is risky to buy here as the macro trend is still down.
Short-Bear / Long-Bull: This is usually a "pullback" or dip within a larger uptrend. This often presents a buying opportunity once the pullback stabilizes.
Tomorrow we’ll be releasing Part 2 of our MA Series — stay tuned! 🎉
You’re welcome to share your stock analysis in the comments based on the six MA patterns we covered today.
Have you spotted any classic golden crosses/death crosses or divergence setups?
Does any stock on your watchlist show MA patterns that match what we learned?
Or do you have your own way of combining MAs with other technical indicators?
Leave a comment to earn 10 Tiger Coins, and you’ll also have a chance to win a $5 stock voucher each week!
For the past lessons, you can click to read:
TA Education 1｜Understand Market Signals! How to Spot $MSFT & $TSLA's Uptrend?
TA Education 2｜How to Spot 2 Common Bearish Patterns?
TA Education 3｜2 Common Bearish Patterns - How to Spot Misleading Signals?
Comments
@koolgal @LMSunshine @Barcode @SPACE ROCKET @nomadic_m @Aqa @Shyon @rL @Universe宇宙 @GoodLife99 @Zarkness @HelenJanet
Have you spotted any classic golden crosses/death crosses or divergence setups?
Does any stock on your watchlist show MA patterns that match what we learned?
Or do you have your own way of combining MAs with other technical indicators?
Leave a comment to earn 10 Tiger Coins, and you’ll also have a chance to win a $5 stock voucher each week!
Recently, I’ve seen a few early golden cross setups after consolidation, and also some short-bull/long-bear divergences — useful to monitor but still too risky to chase since the long-term trend is weak. These mixed signals remind me to stay patient instead of forcing trades.
I like combining MAs with volume and RSI to filter noise. When a golden cross appears with rising volume or a pullback matches an RSI rebound, the setup feels much stronger. Looking forward to Part 2 for more ways to refine timing.
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This strong bearish signal came after Bitcoin had already dropped about 25% from its early October peak of USD 126,000.
The Death Cross signal further accelerated the selling pressure, leading to iBit ETF experiencing over USD 1.26 billion in net outflows in mid November alone. This is the longest stretch of outflows since its launch in January 2024.
This example is interesting because while the traditional interpretation of a Death Cross is a strong sell signal for an impending bear market, previous Death Crosses in Bitcoin's history actually coincided with its bottoms .
The iBit Death Cross is a good example of how this technical indicator can trigger short term selling.
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This technical indicator confirmed a major shift in investor sentiment from bearish to strongly bullish. Short term buying pressure was now dominant and likely to persist.
This event in Rocket Lab's history highlights how a Golden Cross can act as a powerful confirmation signal for a new sustained uptrend in a growth stock , validating the fundamental story with strong technical indicators.
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I use the Golden Cross and Death Cross to confirm major shifts in market momentum and trend direction.
The Golden Cross is a Bullish Buy Signal which occurs when a shorter term moving average (the 50 day SMA) crosses above a longer term moving average (the 200 day SMA).
In contrast a Death Cross is the inverse pattern where the shorter term moving average (the 50 day SMA) crosses below the longer term moving average (the 200 day SMA).
A Death Cross is a Bearish Sell signal which indicates the short term momentum is rapidly deteriorating and selling pressure is taking hold.
Both the Golden Cross and Death Cross are powerful confirmations of trend shifts helping me make the right decisions in market momentum.
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