Mastering Price Reversals

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Questions and Answers

Which of the following best describes the potential price reversals mentioned in the text?

  • A signal of overbought or oversold conditions (correct)
  • A signal of a trend reversal
  • A signal of a trend continuation
  • A signal of a breakout

What does it mean when the price moves near or touches the upper band?

  • The price is likely to stay the same
  • The price is likely to continue rising
  • The price is likely to reverse and start falling (correct)
  • The price is likely to experience a breakout

What does it mean when the price moves near or touches the lower band?

  • The price is likely to stay the same
  • The price is likely to continue falling (correct)
  • The price is likely to reverse and start rising
  • The price is likely to experience a breakout

Which of the following best describes how Bollinger Bands indicate higher volatility?

<p>The bands widen (C)</p>
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What does it suggest when Bollinger Bands narrow?

<p>Lower volatility (D)</p>
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What is the main purpose of Bollinger Bands?

<p>To measure price volatility (C)</p>
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