CPT Technical Analysis & Chart Patterns 2

Question 1

A rising wedge pattern that forms after a sustained uptrend typically signals what outcome?

Accepted Answer

Bearish reversal

Answer

A rising wedge in an uptrend is a bearish reversal pattern because converging trendlines show weakening buying pressure.

Question 2

Which volume behavior is most typical during the formation of a symmetric triangle?

Accepted Answer

Volume contracts as the pattern develops

Answer

Volume typically contracts during a symmetrical triangle as traders await resolution of the indecision pattern.

Question 3

The Fibonacci retracement level most commonly used as a 'golden ratio' support/resistance zone is:

Accepted Answer

61.8%

Answer

The 61.8% level, derived from dividing a number by the next in the Fibonacci sequence, is known as the golden ratio.

Question 4

In candlestick analysis, a 'doji' candle is best characterized by:

Accepted Answer

Open and close prices that are nearly equal

Answer

A doji has nearly identical open and close prices, forming a cross shape that signals market indecision.

Question 5

When the MACD line crosses above the signal line, this event is interpreted as:

Accepted Answer

A bullish momentum signal

Answer

A MACD line crossing above the signal line is a classic bullish crossover indicating upward momentum is strengthening.

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