Intro to trading 3
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Questions and Answers

Which type of triangle pattern anticipates an upside breakout?

  • Ascending triangles (correct)
  • Descending triangles
  • Symmetrical triangles
  • None of the above
  • Which type of triangle pattern anticipates a downside breakout?

  • Ascending triangles
  • Descending triangles (correct)
  • Symmetrical triangles
  • None of the above
  • Which time frame is commonly used by intraday traders for analyzing price movement?

  • 15-minute chart (correct)
  • Hourly chart
  • 5-minute chart
  • 4-hour chart
  • What is technical analysis used to predict?

    <p>Future price movement of a security</p> Signup and view all the answers

    What is the primary theory behind the validity of technical analysis?

    <p>The collective actions of all market participants accurately reflect all relevant information pertaining to a traded security.</p> Signup and view all the answers

    Which type of chart is commonly used to show price movement on a chart?

    <p>Candlestick chart</p> Signup and view all the answers

    What does a blue candlestick body indicate?

    <p>Closing price was higher than the opening price</p> Signup and view all the answers

    What does a doji candlestick indicate?

    <p>Indecision in the market</p> Signup and view all the answers

    What does the length of the upper and/or lower shadows on a doji candlestick indicate?

    <p>Market indecision</p> Signup and view all the answers

    What range of ADX readings represents a beginning or moderate strength trend?

    <p>25-50</p> Signup and view all the answers

    What does a downsloping ADX line indicate?

    <p>A weakening trend</p> Signup and view all the answers

    Which candlestick pattern indicates a possible upcoming reversal to the upside after a prolonged downtrend?

    <p>Dragonfly doji</p> Signup and view all the answers

    What does the gravestone doji indicate?

    <p>A potential downside reversal</p> Signup and view all the answers

    What is the primary purpose of using moving averages in technical analysis?

    <p>Assisting in making trading decisions</p> Signup and view all the answers

    What are Fibonacci ratios commonly used for in technical analysis?

    <p>Identifying trading opportunities and profit targets</p> Signup and view all the answers

    The ADX is calculated to reflect the expansion or contraction of the price range of a security over a period of time. What is the traditional setting for the ADX indicator?

    <p>14 time periods</p> Signup and view all the answers

    Why do many technical analysts prefer to see only the ADX line instead of the +DMI and -DMI lines?

    <p>The three lines can be visually confusing</p> Signup and view all the answers

    Which of the following is true about Fibonacci retracements?

    <p>They are used to identify trade entry points during a retracement</p> Signup and view all the answers

    Which of the following is true about Fibonacci extensions?

    <p>They indicate how much higher price may extend when the overall uptrend resumes</p> Signup and view all the answers

    What is the purpose of momentum indicators in technical analysis?

    <p>To determine market strength and trend direction</p> Signup and view all the answers

    Technical analysis is a method used to predict the probable future price movement of a security based on market data.

    <p>True</p> Signup and view all the answers

    Technical traders believe that current or past price action in the market is the most reliable indicator of future price action.

    <p>True</p> Signup and view all the answers

    Intraday traders prefer analyzing price movement on longer time frame charts, such as the 4-hour or daily charts.

    <p>False</p> Signup and view all the answers

    True or false: A dragonfly doji indicates a possible upcoming reversal to the upside after a prolonged downtrend.

    <p>True</p> Signup and view all the answers

    True or false: Moving averages are the most widely-used technical indicator in trading strategies.

    <p>True</p> Signup and view all the answers

    True or false: Fibonacci levels are commonly used to pinpoint trading opportunities and profit targets during sustained trends.

    <p>True</p> Signup and view all the answers

    True or false: Fibonacci ratios complement each other and can be used to identify trade entry points during price retracements.

    <p>True</p> Signup and view all the answers

    True or false: Daily pivot points are calculated using the previous trading day's high, low, opening, and closing prices.

    <p>True</p> Signup and view all the answers

    True or false: Fibonacci extensions indicate how much higher price may extend when the overall uptrend resumes.

    <p>True</p> Signup and view all the answers

    True or false: Momentum indicators help investors determine market direction.

    <p>False</p> Signup and view all the answers

    True or false: The ADX indicator measures trend strength and can serve as an early warning signal for a trend coming to an end.

    <p>True</p> Signup and view all the answers

    Ascending triangles are a bearish formation that anticipates a downside breakout.

    <p>False</p> Signup and view all the answers

    Descending triangles are a bullish formation that anticipates an upside breakout.

    <p>False</p> Signup and view all the answers

    Symmetrical triangles indicate the continuation of a bullish or bearish market.

    <p>True</p> Signup and view all the answers

    True or false: The ADX indicator is used to determine whether a market is trending or ranging?

    <p>True</p> Signup and view all the answers

    True or false: An ADX reading below 25 indicates a trending market?

    <p>False</p> Signup and view all the answers

    True or false: The slope of the ADX line can indicate the strength of a trend?

    <p>True</p> Signup and view all the answers

    True or false: Traders who hold market positions overnight and for long periods of time are more inclined to analyze markets using hourly, 4-hour, daily, or even weekly charts.

    <p>True</p> Signup and view all the answers

    True or false: Price movement that occurs within a 15-minute time span may be very significant for a trader who is looking for an opportunity to realize a profit from price changes occurring during one trading day.

    <p>True</p> Signup and view all the answers

    True or false: Candlestick charting is the most commonly used method of showing price movement on a chart.

    <p>True</p> Signup and view all the answers

    True or false: Each candlestick on an hourly chart shows the price action for one hour, while each candlestick on a 4-hour chart shows the price action during each 4-hour time period.

    <p>True</p> Signup and view all the answers

    True or false: The MACD is a trend direction indicator.

    <p>False</p> Signup and view all the answers

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