CMT Practice Questions
A point & figure chart DIFFERS from a bar chart as a. A new plot on a point and figure chart is made only when the price changes by a given amount b. Time intervals are clearly shown in a point and figure chart c. Point and figure charts are only concerned with measuring price momentum d. A new plot on a bar chart is made only when the price changes by a given amount
Answer a. A new plot on a point and figure chart is made only when the price changes by a given amount Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 2
Moving average crossovers can be used to indicate a. Buy and sell signals b. Positive relative strength c. Negative volume d. Trend divergence
Answer a. Buy and sell signals Reference: Pring, Martin J. Technical Analysis Explained. Chapter 9
The simple moving average a. Gives equal weight to each periods price b. Gives greater weight to the more recent price c. Assigns greater weight to more recent data and includes all of the data in the life of the instrument d. None of the above
Answer a. Gives equal weight to each periods price Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14
Accumulation normally occurs a. Near a market bottom b. Near a market top c. In declining markets d. After a completed trading range
Answer a. Near a market bottom Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5
Shorter moving averages a. Produce more trades b. Produce fewer whipsaws c. a and b d. None of the above
Answer a. Produce more trades Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14
Which of the following is LEAST reliable? a. Triangles b. Wedges c. Broadening Formations d. Pennants
Answer a. Triangles Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5
Volume should diminish during the price swings within a triangular pattern a. True b. False c. Sometimes d. Only on the downside swings
Answer a. True Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15
Moving averages tend to change direction well after a peak or trough in price and therefore are considered "late" in changing direction. Which of the following is generally considered the MOST effective way to offset this tendency to lag? a. Using a weighted moving average b. Using an unweighted moving average c. Using moving average crossovers d. None of the above
Answer a. Using a weighted moving average Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14
Technical analysts generally believe a. That trendline analysis cannot be applied to point and figure charts b. A price close beyond the trendline is more significant than an intra-day penetration c. Trendlines are useful for validation of price gaps d. Price whipsaws can be avoided using trendlines
Answer b. A price close beyond the trendline is more significant than an intra-day penetration Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 2
Which of the following is NOT true about volume? a. A rally that develops on declining volume is suspect b. A rally that occurs on rising volume points to a probable trend reversal c. Both price and volume can fall off sharply after a buying climax d. A downside break of a moving average or trendline should occur on heavy volume to qualify as a bearish signal
Answer b. A rally that occurs on rising volume points to a probable trend reversal Reference: Pring, Martin J. Technical Analysis Explained. Chapters 22-23
Blow-offs are identified a. Near market bottoms b. By observing a sharp rally in prices after a long advance accompanied by a sharp increase in trading activity c. By observing a sudden sharp drop in prices after a long decline accompanied by heavy trading activity d. Using techniques of cycle analysis
Answer b. By observing a sharp rally in prices after a long advance accompanied by a sharp increase in trading activity Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition.Chapter 10.1
A descending triangle that forms in a downtrend would probably be considered a a. Reversal pattern b. Continuation pattern c. Either a or b d. Probably wouldn't be useful in forecasting the future direction of the trend
Answer b. Continuation pattern Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15
An exponentially smoothed moving average a. Excludes older price points in the calculation b. Gives more weight to more recent observations c. Cannot be plotted on a bar chart d. None of the above
Answer b. Gives more weight to more recent observations Reference: Pring, Martin J. Technical Analysis Explained. Chapter 9
The reversal pattern that can also appear as a continuation pattern is a. Saucer b. Head and shoulders c. Spike d. Double top
Answer b. Head and shoulders Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition. Chapter 6
The measuring technique for MOST continuation patterns implies that a price objective from the breakout point is equal to the ____ of the pattern at its broadest point a. Width b. Height c. None of the above d. 100% of prior trend
Answer b. Height Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5
An extreme overbought reading on a momentum indicator in the early stages of a rally a. Shows that the market is ready to correct b. Indicates that the rally is strong and will probably carry further c. Is a clear indication that the pace of the rally is about to slow down d. Is a clear indication that the pace of the rally is about to accelerate
Answer b. Indicates that the rally is strong and will probably carry further Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 18
Which of the following is LEAST true of a doji pattern? a. It represents indecision b. It is usually a continuation pattern c. It is usually a reversal pattern d. The opening and closing prices are at identical levels
Answer b. It is usually a continuation pattern Reference: Pring, Martin J. Technical Analysis Explained. Chapter 13
On a head and shoulders top, the "head" is typically made on a. Active volume b. Light volume c. Breakout volume d. Normal volume
Answer b. Light volume Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition. Chapter 6
During a consolidation, price action normally a. Reverses decisively in one direction on heavy volume b. Moves within well defined neutral boundaries on moderate or less than moderate volume c. Retraces one third of its previous price movement d. Diverges from volume
Answer b. Moves within well defined neutral boundaries on moderate or less than moderate volume Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition. Chapters 8 & 9
The resistance level of a price trend refers to a. The level under the market where buying interest is sufficiently strong to overcome selling pressure b. The level over the market where selling pressure is sufficiently strong to overcome buying pressure and a price advance is expected to be turned back c. The boundaries of the trading range of the trend d. The target price indicated by the count
Answer b. The level over the market where selling pressure is sufficiently strong to overcome buying pressure and a price advance is expected to be turned back Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 12
In constructing a point and figure chart, a new box is added ONLY when a. The price has moved by less than the specified box size b. The price has moved by equal to or more than the specified box size c. The volume confirms the price movement d. The price has moved to a new high
Answer b. The price has moved by equal to or more than the specified box size Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 2
A selling climax a. Typically occurs at a market top b. Typically occurs at a market bottom c. Is accompanied by average to low volume d. Indicates new shorts getting trapped at the bottom
Answer b. Typically occurs at a market bottom Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition.Chapter 10.
Technicians believe that a. Price precedes volume b. Volume precedes price c. Volume and price are typically coincident indicators d. Volume matters most during breakouts
Answer b. Volume precedes price Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5
In a 10-day simple moving average, each day's price is assigned a weighting of a. 1% b. 5% c. 10% d. 20%
Answer c. 10% Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14
The "crossover method" refers to a. Buying the same security high and selling it low twice in the same day b. Taking the buy/sell recommendations of a fundamental analyst c. A buy or sell signal generated when a shorter moving average crosses a longer moving average d. a and b
Answer c. A buy or sell signal generated when a shorter moving average crosses a longer moving average Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14
Triangle price patterns should be accompanied by a. Active volume within the pattern b. Heavier volume in the direction of the eventual breakout c. A gradual drop-off in volume until the breakout d. No discernible difference in volume until after the breakout occurs
Answer c. A gradual drop-off in volume until the breakout Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15
Violated support levels typically a. Become support levels as prices fall lower b. Are associated with declining price projections c. Become resistance levels on price bounces d. Indicate an imminent price reversal
Answer c. Become resistance levels on price bounces Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 12
In a head and shoulders pattern, volume usually a. Is greatest in the middle leg b. Increases with each successive peak c. Decreases with each successive peak d. Is constant throughout the pattern
Answer c. Decreases with each successive peak Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15
A simple moving average is often criticized because a. The most recent events are given extra weight b. The entire price time series is used in its calculation c. Equal weight is given to each point included in the calculation d. It is difficult to calculate
Answer c. Equal weight is given to each point included in the calculation Reference: Pring, Martin J. Technical Analysis Explained. Chapter 9
To help confirm a price trend, volume should expand a. On a reversal day b. On a strong close c. In the direction of the trend d. When a price target is met
Answer c. In the direction of the trend Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5
An appropriate time interval selection for a bar chart which is designed to show very long-term trends would be a. Daily b. Weekly c. Monthly d. Annually
Answer c. Monthly Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 23
An exhaustion gap is observed a. In the beginning stage of a bear market b. After prices have moved sideways for an extended period of time c. Near the end of a major price move d. With light trading volume
Answer c. Near the end of a major price move Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 11
Which tools could you use in candle pattern filtering? a. Cycles b. Point and Figure chart c. RSI and MACD d. Dow Theory
Answer c. RSI and MACD Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 17
The primary use of candlestick patterns is to a. Define the intermediate and short-term trends, but not the primary trend b. Define the primary, intermediate, and short-term trends c. Strengthen the possibility of a reversal or continuation of a price trend d. Determine if you are in a bull market or a bear market
Answer c. Strengthen the possibility of a reversal or continuation of a price trend Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 17
Which of the following is NOT an underlying assumption of technical analysis? a. Prices move in trends b. Price discounts everything c. The consensus is always wrong d. Supply and demand determines price
Answer c. The consensus is always wrong Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 2
As the price unit of a reversal on a point and figure chart is decreased a. Time analysis becomes more critical for interpretation b. The detail of price movement graphically displayed is decreased c. The detail of price movement graphically displayed is increased d. The possibility of whipsaws decreases
Answer c. The detail of price movement graphically displayed is increased Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 17
The objective of the Dow Theory is to determine a. Changes in market psychology b. The likelihood of volume reversals c. The primary direction of the stock market d. Timing of market bottoms
Answer c. The primary direction of the stock market Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 6
Which is an example of candle pattern filtering? a. Accepting only those patterns that fit the strict definition of their pattern b. Accepting only those patterns that are confirmed by the intermediate trend c. Using western techniques to confirm a candle pattern d. Using cycles to confirm the existence of a pattern
Answer c. Using western techniques to confirm a candle pattern Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 11
The basic concept behind the use of a trendline is that a. Price and volume tend to confirm each other b. Prices rise and fall in cyclical patterns c. Prices follow a natural rhythm d. A trend in motion will remain in motion until it reverses
Answer d. A trend in motion will remain in motion until it reverses Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 2
Which of the following can be considered a sentiment indicator a. Specialist Short Sales Ratio b. Mutual Fund Cash/Asset Ratio c. Odd Lot Purchase/Sales Ratio d. All of the above
Answer d. All of the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians Chapter 12
A continuation pattern is a. A pause in the prevailing trend b. Usually a sideways price action c. Usually a near term or intermediate term pattern d. All of the above
Answer d. All of the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15
A symmetrical triangle is a. Also called a coil b. Usually a continuation pattern c. A temporary pause in the existing trend d. All of the above
Answer d. All of the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15
The apex of a triangular pattern is a. The point where two lines meet b. A point that helps to time and measure the potency of the pattern c. An important support or resistance level after the breakout occurs d. All of the above
Answer d. All of the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15
Which of the following indicators are used to measure market breadth? a. Cumulative breadth line b. Advance/decline ratio c. McClellan oscillator d. All of the above
Answer d. All of the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 8
Speed resistance lines a. Divide a trend in thirds b. Measure the rate of ascent or descent of a trend c. Are used to measure percentage retracements d. All of the above
Answer d. All of the above Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition. Chapter 12
On a daily bar chart a. Each day's price action is represented by a vertical bar; the daily high, low and close are plotted b. Prices are plotted vertically, time horizontally c. The price scale may be either arithmetic or logarithmic d. All of the above
Answer d. All of the above Reference: Pring, Martin J. Technical Analysis Explained. Chapter 10
Risk can be defined as: a. Variability of returns b. Amount of loss per trade c. Beta d. All of the above
Answer d. All of the above Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 2
The January Effect is: a. As the S&P goes in January, so goes the year b. When small cap stocks are more likely to outperform the market c. Has not worked well in recent years d. B and C
Answer d. B and C Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 9
The most commonly used price to calculate the moving average is the a. High b. Low c. Midpoint d. Close
Answer d. Close Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14
Volume in a head and shoulders pattern is HIGHEST where? a. At the top of the head b. At the completion of the head c. During the right shoulder d. During the left shoulder
Answer d. During the left shoulder Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition. Chapter 6
Oscillators are used to alert the analyst to a. Volume divergences b. Continuation patterns c. Extended rallies d. Overbought or oversold price conditions
Answer d. Overbought or oversold price conditions Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapters 8 and 18
As with trendlines, speed resistance lines a. Can be used in conjunction with sentiment indicators b. Indicate the potential for immediate price reversals c. Must be confirmed with volume d. Reverse roles once they are broken
Answer d. Reverse roles once they are broken Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 12
The body of the candlestick line displays the relationship between: a. The current session's high and low b. The current session's close and the prior session's close c. The current session's open and high d. The current session's open and close
Answer d. The current session's open and close Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 17
All of the following are true of flag and pennant patterns EXCEPT a. They are short term patterns completed in one to two weeks b. They are preceded by sharp and nearly straight line moves c. They are characterized by a decrease of volume during the formation of the pattern d. They are reversal patterns
Answer d. They are reversal patterns Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 5
Longer-term moving averages a. Give fewer buy and sell signals b. Are better at giving signals at major tops c. "Give back" a lot more when the trend reverses d. a and c
Answer d. a and c Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14
Which moving average(s) assign GREATER weight to the most recent data? a. Simple b. Weighted c. Exponential d. b and c
Answer d. b and c Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14
The descending triangle is just a mirror image of the ascending triangle and is generally considered a ______ pattern a. Bullish b. Bearish c. Continuation d. b and c
Answer d. b and c Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15
Stock traders rely heavily on a. 4 and 92 day moving averages b. 50 and 200 day moving averages c. 30 and 40 week moving averages d. b and c
Answer d. b and c Reference: Pring, Martin J. Technical Analysis Explained. Chapter 9. Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14
Moving averages are of LEAST use in generating buy or sell signals in a. A sideways trend b. A moderately sloping uptrend c. A steep downtrend d. Not especially useful in any of them
Answer: a. A sideways trend Reference: Pring, Martin J. Technical Analysis Explained. Chapter 9.
Which of the following describes an equally weighted average? a. An investor invests the same dollar amount in each security b. Is adjusted by a divisor c. Considers the market capitalization of each security in the average d. Is the way the Dow Jones Industrial Average is calculated
Answer: a. An investor invests the same dollar amount in each security Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 5.
Oscillators are normally used to a. Identify overbought or oversold market conditions b. Identify price/volume divergences c. Identify Elliott Wave cycles d. Gauge differentials between buyers and sellers
Answer: a. Identify overbought or oversold market conditions Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapters 8 and 18
In point and figure charting, the ability to obtain price objectives through use of the horizontal count is a principal advantage of the a. One box reversal chart b. Three box reversal chart c. Five box reversal chart d. All of the above
Answer: a. One box reversal chart Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 4.
Which is NOT true of a buying climax? a. Prices fall sharply at first b. Volume is very heavy c. The close is near the low end of the daily range d. Prices initially rise sharply
Answer: a. Prices fall sharply at first Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15.
Which BEST characterizes continuation patterns? a. There is sideways price action b. They take a long time to form c. They usually represent long-term patterns d. They signal the start of a new trend
Answer: a. There is sideways price action Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 17.
Which of the following percentage parameters is NOT a widely recognized percentage retracement? a. 66% b. 45% c. 50% d. 33%
Answer: b. 45% Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 13.
Which type of gap is LEAST likely to be filled when it occurs with high volume? a. Common b. Breakaway c. Exhaustion d. Runaway
Answer: b. Breakaway Reference: Pring, Martin J. Technical Analysis Explained. Chapter 6.
To INCREASE the sensitivity of a 5 x 3 point and figure chart, one would a. Increase the box size b. Decrease the box size c. Increase the number of boxes needed for a reversal d. Both a and c
Answer: b. Decrease the box size Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 2.
As a general rule, in rectangle, triangle, flag and pennant patterns, volume GENERALLY a. Increases as the pattern develops b. Decreases as the pattern develops c. Stays constant as the pattern develops d. Shows signs of accumulation
Answer: b. Decreases as the pattern develops Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5.
What pattern is found in point and figure charts? a. Doji b. Head and shoulders c. Island reversal d. All of the above
Answer: b. Head and shoulders Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 4.
Point and figure charts are LEAST suited to a. Establishing targets b. Identifying areas of accumulation or distribution c. Identifying areas of support and resistance d. Identifying breakouts
Answer: b. Identifying areas of accumulation or distribution Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 1
When analyzing long term price movements, it could be helpful to use which type of chart? a. Candle chart b. Logarithmic chart c. Bar chart d. Point and figure chart
Answer: b. Logarithmic chart Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 11.
A breakaway gap usually a. Occurs during the accumulation phase of a market cycle b. Signals the beginning of an important price move c. Provides a major divergence signal d. Occurs at the end of an important price move
Answer: b. Signals the beginning of an important price move Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition.Chapter 12
The secondary trend is measured in __________, and the intermediate trend is measured in __________. a. Months or years; days or weeks b. Weeks or months; weeks or months c. Days or weeks; intraday minutes d. Intraday minutes; weeks and months
Answer: b. Weeks or months; weeks or months Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 6.
Using intraday 1x1 point and figure charts, which breakout is MOST significant? a. A breakout from a 5 column congestion zone b. A breakout from a 10 column congestion zone c. A breakout from a 15 column congestion zone d. The breakouts are of equal significance
Answer: c. A breakout from a 15 column congestion zone Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 1.
An inverse head and shoulders pattern is a. A topping pattern b. Generally unreliable c. A reversal pattern d. a and b
Answer: c. A reversal pattern Reference: Edwards, Robert D. and Magee, John, Technical Analysis of Stock Trends, 9th Edition. Chapter 6.
The Dow Theory uses ONLY a. High prices b. Low prices c. Closing prices d. All of the above
Answer: c. Closing prices Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 6.
A REASONABLE price objective once a stock has completed a head and shoulders pattern is a. 100% of the previous trend b. Derived using the Fibonacci Ratio c. Equivalent to the distance between the head and neckline d. Depends on the action of the accompanying volume
Answer: c. Equivalent to the distance between the head and neckline Reference: Edwards, Robert D. and Magee, John. Technical Analysis of Stock Trends, 9th Edition.Chapter 6.
According to Robert Rhea's hypotheses: I. The primary trend is inviolate II. The averages discount everything III. Dow Theory is not infallible IV. Dow Theory is predictable a. I and II b. I and III c. I, II, and III d. I, II, III, and IV
Answer: c. I, II, and III Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 6.
Which of the following would NOT be considered a means of identifying a trend? a. Regression lines b. Trendlines c. Relative strength lines d. Moving averages
Answer: c. Relative strength lines Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 12
In a doji candlestick a. Supply exceeds demand b. Demand exceeds supply c. Supply and demand are in balance d. All the above
Answer: c. Supply and demand are in balance Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 17.
When using a moving average crossover system to generate buy/sell signals, a SELL signal would be generated when a. The slower moving average falls below the faster average b. The slow rises above the fast c. The fast falls below the slow d. Either a or c
Answer: c. The fast falls below the slow Reference: Pring, Martin J. Technical Analysis Explained. Chapter 9.
For a breakout or breakdown from a triangle to be considered valid it should occur NO MORE than _______ of the distance to the apex from the beginning of the pattern? a. One-half b. Two-thirds c. Three-quarters d. Five-sixths
Answer: c. Three-quarters Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15.
The following is NOT common of reversal patterns a. The existence of a prior trend b. The larger the pattern the greater the subsequent move c. Tops usually take longer to form than bottoms d. The break of a major trendline
Answer: c. Tops usually take longer to form than bottoms Reference: Edwards, Robert D. and Magee, John, Technical Analysis of Stock Trends, 9th Edition. Chapter 6.
The MAXIMUM objective of reversal patterns is a. 50% retracement b. 66% retracement c. .618 of the current price d. 100% retracement
Answer: d. 100% retracement Reference: Edwards, Robert D. and Magee, John, Technical Analysis of Stock Trends, 9th Edition. Chapter 6.
What is indicated when Bollinger Bands narrow? a. A stock is ready for a rally b. A stock is ready for a decline c. A stock's volatility has increased d. A stock's volatility has decreased
Answer: d. A stock's volatility has decreased Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14.
The moving average a. Follows the trend b. Is a smoothing device c. Lags market action d. All of the above
Answer: d. All of the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 14
The breakout from a triangle formation a. Should take place with a sharp increase in volume b. Should take place between two-thirds to three-fourths of the way through the pattern c. Is a price level that immediately becomes support/resistance d. All of the above
Answer: d. All of the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 15
Common filters used to confirm a trendline break INCLUDE a. Penetration above/below the trendline by a set percentage b. A pre-defined period of time during which prices stay above/ below the trendline c. A close above/below the trendline d. All the above
Answer: d. All the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 13.
Which is/are considered important in determining the validity of a trendline break? a. Time b. Price c. Volume d. All of the above
Answer: d. All the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 13.
On balance volume is USEFUL to a. Confirm price b. Spot divergence c. Clarify volume trends d. All the above
Answer: d. All the above Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 4.
Which of the following would NOT be considered a support level? a. Previous high b. Previous low c. Trading range d. All the above are considered to be support levels
Answer: d. All the above are considered to be support levels Reference: Edwards, Robert D. and Magee, John, Technical Analysis of Stock Trends, 9th Edition. Chapter 13.
When a stock breaks through the bottom of a down sloping standard deviation channel (around a regression line) a. The stock is oversold b. An acceleration of the trend may be about to occur c. It is at the limits of normal distribution d. Any of the above
Answer: d. Any of the above Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 12
In the Dow Theory, the MOST important price is the a. Open b. High c. Low d. Close
Answer: d. Close Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 6.
Which of the following would MOST likely be a continuation pattern? a. Engulfing pattern b. Head and shoulders c. Double bottom d. Flag
Answer: d. Flag Reference: Edwards, Robert D. and Magee, John, Technical Analysis of Stock Trends, 9th Edition. Chapter 11.
Which is TRUE of double tops a. There are two identifiable peaks at very different price levels b. Volume is lighter during the first peak c. They often occur at market bottoms d. Height is often used as a measuring objective
Answer: d. Height is often used as a measuring objective Reference: Pring, Martin J. Technical Analysis Explained. Chapter 5.
Flow of fund analysis relies in part a. On the sentiment of investment advisory services b. On monthly price movements of the Dow Jones Industrial Average c. On market volume statistics d. On measuring the cash position of different investor groups
Answer: d. On measuring the cash position of different investor groups Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 10
In what charting technique will trendlines ONLY be drawn at 45 degree angles? a. Bar charts b. Candlestick charts c. Swing charts d. Simplified three box point and figure charts
Answer: d. Simplified three box point and figure charts Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 3.
A stock trades in a range between 51 and 55 for 10 days and then moves higher. If you have been charting the stock with a 3 box reversal point and figure chart, with 2 points assigned per box, what would the horizontal count be? a. 30 points b. 10 points c. 60 points d. There would be no count
Answer: d. There would be no count Reference: du Plessis, Jeremy. The Definitive Guide to Point and Figure. Chapter 4.
A Channel breakout system works extremely well in a. Trending markets b. Non-trending markets c. Daily and weekly charts and monthly charts d. a and c
Answer: d. a and c Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 12
In order for a Dow Theory sell signal to be confirmed a. The Dow Jones Industrials (DJI) and the Dow Transports (DJT) must peak simultaneously b. The DJI and DJT must fail to confirm at the highs c. Both the DJI and DJT must break below an important intermediate term support level d. b and c
Answer: d. b and c Reference: Dahlquist, Julie R., and Charles D. Kirkpatrick. Technical Analysis: The Complete Resource for Financial Market Technicians. Chapter 6.
