28 Questions
What is the term for the pattern that marks the turning point between the bull and bear phases?
Reversal pattern
What type of pattern is formed when the price hits a resistance level, breaks through it, 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?
It is normally heaviest
What is the term for the pattern that forms when the security passes from weak, uninformed participants to strong, informed ones?
Accumulation pattern
What is the term for the pattern that forms when the security is distributed from strong, informed participants to weak, uninformed ones?
Distribution pattern
What is the primary difference between a head-and-shoulders top and a head-and-shoulders bottom?
The direction of the price movement
What is the significance of the price pushing through line AA in Figure 8.6?
It confirms the reversal of a trend
What is the purpose of analyzing volume characteristics in head-and-shoulders patterns?
To assess the validity of the pattern
What is the relationship between the security and market participants in a distribution area?
The security is distributed from strong, informed participants to weak, uninformed ones
What is the commonality between the formation of the left shoulder and the approach to the peak in head-and-shoulders patterns?
Heaviest volume activity
What determines whether a pennant pattern is bullish or bearish?
The trend before the pennant began to form
What is the characteristic of a pennant pattern in terms of its formation period?
It forms over a shorter period of time
What type of pattern is a pennant?
Continuation pattern
What is the difference between a pennant and a triangle?
Pennants form over shorter periods of time, while triangles form over longer periods of time
What happens to the price of a stock as it forms a pennant?
It moves into a tighter and tighter consolidation range
What is the symmetrical triangle?
A type of triangle
What is the main characteristic of a triple top?
A bearish reversal pattern that forms as the price hits a resistance level three times
What is the purpose of continuation patterns?
To provide an advanced warning when a stock price is likely to resume its trend
What type of pattern is a flag?
A continuation pattern that forms as the price pulls back from the predominant trend in a parallel channel
What is the main difference between a triple top and a triple bottom?
The direction of the trend before the pattern forms
Which continuation pattern forms as the price moves in a triangle shape?
Pennant
What is the main purpose of understanding chart patterns?
To put the odds of success in favor
What is the primary purpose of analyzing volume characteristics in head-and-shoulders patterns?
To assess the validity of the pattern
Which part of a head-and-shoulders pattern forms when the price hits a resistance level?
The left shoulder
What happens to the price in a head-and-shoulders bottom pattern?
It breaks through the first support level and hits a lower support level
What is characteristic of the activity during the formation of the left shoulder?
It is heaviest
What is the relationship between the security and market participants in an accumulation pattern?
The security passes from weak, uninformed participants to strong, informed ones
What is the significance of the price pushing through line AA in Figure 8.6?
It is a sign of a reversal pattern
Identify and understand the characteristics of flags and pennants in stock market trends, including bullish and bearish continuation patterns.
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