Technical Analysis Fundamentals
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Questions and Answers

What is the primary focus of technical analysis?

  • Studying past market data, primarily price and volume, to forecast future price movements (correct)
  • Researching company fundamentals such as earnings, revenue, and management quality
  • Evaluating a company's intrinsic value by assessing financial statements and performance
  • Analysing economic conditions to understand their impact on market trends and investments
  • Which principle of technical analysis states that the current price of an asset reflects all available information?

  • Prices Move in Trends
  • The Market Discounts Everything (correct)
  • History Tends to Repeat Itself
  • Support and Resistance Levels
  • What type of chart visually represents price movements over time and is commonly used in technical analysis?

  • Pie Chart
  • Line Chart
  • Bar Chart
  • Both Line and Bar Charts (correct)
  • What do support and resistance levels indicate in technical analysis?

    <p>Key price points where the market tends to reverse direction (B)</p> Signup and view all the answers

    What is the purpose of moving averages in technical analysis?

    <p>To smooth out price data to identify the direction of the trend (B)</p> Signup and view all the answers

    What does the Relative Strength Index (RSI) measure?

    <p>The speed and change of price movements on a scale of 0 to 100 (B)</p> Signup and view all the answers

    What is the MACD used for in technical analysis?

    <p>To identify potential buy and sell signals (C)</p> Signup and view all the answers

    What do Bollinger Bands help traders identify?

    <p>Volatility and potential overbought or oversold conditions (B)</p> Signup and view all the answers

    Why is it beneficial to practice technical analysis with paper trading?

    <p>To build confidence and test your skills in a risk-free environment (B)</p> Signup and view all the answers

    Why is it important to stay informed and continuously educate yourself about new techniques and tools in technical analysis?

    <p>To maintain the same trading strategy indefinitely (A)</p> Signup and view all the answers

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