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200-Day Moving Average, SMA vs EMA, Golden Cross and Death Cross

How simple and exponential moving averages work, the 20/50/100/200-day averages, distance from the average, and golden and death crosses.

Reviewed · Sources at the end · How Vyreon measures
Vyreon's per-security reports are not live yet; this page describes what they will measure. Examples are illustrative.

A moving average is the average closing price over a fixed number of recent sessions, recalculated every day. It smooths out day-to-day noise so the underlying direction is easier to see. The 50-day and 200-day averages are common reference lines, and the 50-day crossing the 200-day has its own names: a golden cross upward, a death cross downward.

SMA Vs EMA

A simple moving average (SMA) gives every close in the window equal weight:

SMA(n) = (sum of the last n closes) / n

An exponential moving average (EMA) gives recent closes more weight, so it reacts faster:

EMA today = EMA yesterday + α × (close − EMA yesterday), with α = 2 / (n + 1)

For a 12-day EMA, α is about 0.154: each new close moves the average about 15% of the way toward it. The 12- and 26-day EMAs are the building blocks of MACD.

20, 50, 100 And 200-Day Moving Averages

"Day" here means trading session; a year has about 252. The 20-day average covers roughly a month, the 50-day about two and a half months, the 100-day about five months and the 200-day about ten months. Shorter averages follow the price closely; longer ones change slowly and describe the broader direction.

What Is The 200-Day Moving Average?

The 200-day moving average is the simple average of the last 200 closes. It is a long-standing long-term reference line in market commentary. Vyreon reports which side the price is on and how many consecutive sessions it has stayed there.

Distance From The Moving Average

Distance = close ÷ moving average − 1, shown as a percentage. Positive means the price is above the average, negative below.

Illustrative example: a close of 105 with a 200-day average of 100 is 5% above the 200-day.

What Is A Golden Cross? What Is A Death Cross?

A golden cross is the day the 50-day SMA moves from below the 200-day SMA to above it. A death cross is the reverse. Because both averages lag, a cross arrives after the price move that caused it. Vyreon reports the current state (50-day above or below the 200-day) and the type and date of the most recent cross in its price history, or that none occurred in that history.

How Vyreon Calculates It

  • SMA 20, 50, 100 and 200 and EMA 12 and 26 on daily closes adjusted for splits and dividends, so a split does not appear as a crash through the average.
  • EMAs are seeded with the simple average of their first n closes.
  • Distance of the close from the 50-day and the 200-day.
  • The 50/200 state and latest cross, using simple averages.
  • Side of the 200-day and the number of sessions on that side.

What Moving Averages Do Not Tell You

  • They summarize past prices and always lag.
  • Price crossing an average, and golden or death crosses, are conventions, not forecasts. Averages can be crossed several times in a sideways market.

Related: MACD · Bollinger Bands · RSI · price channels · relative performance

Sources

  • John J. Murphy, Technical Analysis of the Financial Markets (New York Institute of Finance, 1999): moving averages and crossover conventions.
  • William Brock, Josef Lakonishok and Blake LeBaron, "Simple Technical Trading Rules and the Stochastic Properties of Stock Returns", Journal of Finance (1992): tested moving-average rules, including 50- and 200-day averages, on the Dow Jones Industrial Average from 1897 to 1986.

Golden and death crosses are market conventions; we know of no peer-reviewed source establishing them as forecasts.