Technical Analysis Chapter 7

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What is the primary benefit of analyzing volume trends in technical analysis?

To confirm the strength of a trend (correct)

To identify price patterns

To measure the enthusiasm of buyers and sellers

To provide a more accurate measurement of price movements

What happens to volume in a rising market according to the principles of volume interpretation?

It contracts as the market rises

It is unpredictable in a rising market

It remains constant as the market rises

It expands as the market rises (correct)

What can volume patterns reveal that price patterns may not?

A strengthening trend

A random price movement

A reversal of the trend (correct)

A weakening trend

What is the significance of price and volume patterns disagreeing?

The underlying trend is not as strong as it looks Signup and view all the answers

What is the weight-of-the-evidence approach in technical analysis?

A comprehensive approach that incorporates multiple forms of analysis Signup and view all the answers

What is the interpretation of high volume accompanying an anemic rally?

A bearish factor indicating churning action Signup and view all the answers

What is the significance of record volume coming off a major low?

It is a very reliable signal that a significant bottom has been seen Signup and view all the answers

What does a volume crescendo followed by a slight contraction indicate?

A temporary exhaustion of buying power, leading to a pause Signup and view all the answers

What is the interpretation of a small rounding top in price accompanied by a rounding bottom in volume?

A doubly abnormal situation, indicating a potential top Signup and view all the answers

What is the significance of heavy volume with little price change following a decline?

It is a bullish factor indicating accumulation Signup and view all the answers

What is the primary indication of a rising price accompanied by a trend of falling volume?

A weak and suspect rally Signup and view all the answers

What is the significance of a new high in price that is not confirmed by volume?

A sign of a potential trend reversal Signup and view all the answers

What does volume typically do during a bull move?

It leads price Signup and view all the answers

What is the combination of rising volume and rising price indicative of?

A normal and healthy market Signup and view all the answers

What does volume measure in relation to price movements?

The relative enthusiasm of buyers and sellers Signup and view all the answers

What can be inferred from a significant increase in activity as the price starts to decline?

The price is confirming a trend reversal. Signup and view all the answers

What is characteristic of an exhaustion move in a price pattern?

A rapid increase in volume followed by a sharp decline in price. Signup and view all the answers

What does a bullish sign indicate when a previous low is being tested with low volume?

A complete lack of selling pressure. Signup and view all the answers

What does a downside breakout from a price pattern on heavy volume indicate?

A reversal in trend. Signup and view all the answers

What is the significance of a reversal dependent on?

The extent of the previous advance and the degree of volume expansion. Signup and view all the answers