What Is the 200-Day Moving Average? How to Use It in Bitcoin and Stock Markets

The 200-day moving average is used as a key indicator for judging the long-term trend of a market. When the price is above the 200-day moving average, it is considered to act as support, and when the price is below the moving average, it is considered to act as resistance.

• The 200-day moving average uses the average price over the past 200 days, or 40 weeks.
• Moving averages are used to identify uptrends or downtrends and to spot potential support and resistance zones.
• The 200-day moving average is usually used together with the 50-day moving average, and the points where the two cross (death cross/golden cross) are considered technically important.
• A simple moving average uses the average price over time, while an exponential moving average gives more weight to recent data.

The 200-Day Moving Average Explained

The 200-day moving average is based on roughly 40 weeks of trading and is used to identify trends in the stock and crypto markets. On the daily timeframe, when the price moves above the 200-day moving average, the market is considered to be in an overall uptrend. The 200-day moving average is the most common choice for judging long-term trends, but some traders use the 255-day moving average instead.

Because it covers a fairly long period, the 200-day moving average is used together with shorter-period moving averages to judge the market trend and gauge the strength of that trend. For example, the 200-day moving average is often used alongside the 50-day moving average. When these moving averages converge, it means the market has no clear trend. On the other hand, when the moving averages move apart, it means the market trend is getting stronger.

Death Cross and Golden Cross

The moment the 200-day moving average crosses the 50-day moving average is key to identifying a death cross or a golden cross. When the 50-day moving average crosses below the 200-day moving average, it is called a death cross, and it signals that a stock, cryptocurrency, index, or similar asset has entered a downtrend. Conversely, when the 50-day moving average crosses above the 200-day moving average, it is called a golden cross, and it signals the start of an uptrend. So you can use these crossover points to look for times to buy or sell.

Simple Moving Average vs. Exponential Moving Average

There are two types of moving averages: the simple moving average (SMA) and the exponential moving average (EMA). The 200-day moving average is usually displayed using the simple moving average, but some traders use the exponential moving average.

Why is that? The simple moving average uses the average price over a given period, while the exponential moving average gives more weight to the most recent trading days. As a result, the exponential moving average reacts more sensitively to current price movements and trends in the market.

That wraps up our look at the 200-day moving average and its related concepts.