CMT CMT Candlestick Analysis

Question 1

A 'Doji' candlestick is characterized by which of the following?

Accepted Answer

Open and close prices are nearly equal

Answer

A Doji forms when the open and close prices are virtually the same, signaling indecision in the market.

Question 2

Which candlestick pattern is formed by a small body at the top of the candle with a long lower shadow, indicating a potential bullish reversal?

Accepted Answer

Hammer

Answer

A Hammer has a small real body near the top and a long lower shadow, suggesting that sellers drove prices down but buyers pushed them back up.

Question 3

A 'Shooting Star' candlestick pattern most commonly signals:

Accepted Answer

Bearish reversal

Answer

A Shooting Star appears at the top of an uptrend with a long upper shadow and small body, signaling a potential bearish reversal.

Question 4

In Japanese candlestick analysis, a 'Marubozu' candle indicates:

Accepted Answer

A candle with no shadows, showing strong momentum

Answer

A Marubozu has no upper or lower shadows, meaning the open equals the high (or low) and the close equals the opposite extreme, reflecting strong directional conviction.

Question 5

Which two-candle pattern forms when a small bearish candle is followed by a large bullish candle that completely engulfs the first, signaling a potential reversal?

Accepted Answer

Bullish Engulfing

Answer

A Bullish Engulfing pattern occurs when a large bullish candle's body completely covers the prior small bearish candle, indicating buyers have taken control.

CMT - Chartered Market Technician Practice Test

CMT - Chartered Market Technician Practice Test

CMT CMT Candlestick Analysis