18 Questions
What is a characteristic of the second top in a double top pattern?
Distinctly less volume than the first top
What does the sideways trend in a market cycle typically represent?
A transitional or horizontal phase
What typically occurs when a stock price is in an up trend?
It forms a double top
What is the primary purpose of price patterns in financial markets?
To identify trading ranges signaling transitions between trends
What is the neckline in a head and shoulders pattern?
The line joining the bottoms of the two shoulders
What is the characteristic of a highly emotional market, as depicted in Figure 8.2?
It can change without warning
What can be said about the volume of the second bottom in a double bottom pattern?
It is very low
What is the general direction of the price movement after a double top or double bottom pattern forms?
In the opposite direction of the previous trend
What is the significance of the line BB in Figure 8.3?
It signals the transition to a horizontal phase
What is a characteristic of the breakout in a double bottom pattern?
It is accompanied by very heavy volume
What is the term used to describe the transitional or horizontal phase separating rising and falling price trends?
Rectangle
What does the transition from a rising to a falling trend often resemble, in terms of its speed and momentum?
A fast-moving train taking a long time to slow down and reverse
What is the term used to describe the rectangle in Figure 8.5, marking the turning point between the bull and bear phases?
Reversal pattern
What type of pattern is formed when the price hits a resistance level, then breaks through the first resistance level and hits a higher resistance level, and then hits the first resistance level again?
Head-and-shoulders top
What is the characteristic of volume during the formation of the left shoulder in a head-and-shoulders pattern?
Volume is normally heaviest
What is the term used to describe the pattern at market tops, where the security is distributed from strong, informed participants to weak, uninformed ones?
Distribution pattern
What is the term used to describe the pattern at market bottoms, where the security passes from weak, uninformed participants to strong, informed ones?
Accumulation pattern
What is the significance of the price pushing through line AA in Figure 8.6?
It indicates a bull market
Learn about price patterns in financial markets, including smaller patterns and gaps, one and two bar price patterns, and market trends.
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