CMT CMT Candlestick Analysis 3

Question 1

Which candlestick pattern consists of three consecutive bullish candles with each candle closing higher, signaling strong upward momentum?

Accepted Answer

Three White Soldiers

Answer

Three White Soldiers is a bullish pattern of three consecutive long bullish candles each closing near their high, demonstrating sustained buying pressure.

Question 2

The 'Inverted Hammer' candlestick pattern at the bottom of a downtrend suggests:

Accepted Answer

Potential bullish reversal requiring confirmation

Answer

An Inverted Hammer at a downtrend low has a long upper shadow and small body, suggesting buyers attempted to push prices higher and a reversal may be forming pending confirmation.

Question 3

A 'Gravestone Doji' most commonly appears at:

Accepted Answer

The top of an uptrend as a bearish reversal signal

Answer

A Gravestone Doji has a long upper shadow and open/close at the low, indicating that buyers initially pushed prices up but sellers completely reversed the gains by close.

Question 4

What does a 'Long-Legged Doji' indicate about the market?

Accepted Answer

Extreme indecision with high volatility during the session

Answer

A Long-Legged Doji has long upper and lower shadows with the open and close near the midpoint, reflecting extreme intra-session volatility and strong indecision.

Question 5

In candlestick analysis, which of the following increases the reliability of a reversal pattern?

Accepted Answer

Confirmation from the following session's candle

Answer

Confirmation from the next session — such as a follow-through candle in the reversal direction — significantly increases the reliability of any candlestick reversal pattern.

CMT - Chartered Market Technician Practice Test

CMT - Chartered Market Technician Practice Test

CMT CMT Candlestick Analysis 3