CTA Candlestick Analysis & Japanese Techniques 2

Question 1

What distinguishes a 'Spinning Top' from a 'Doji' candlestick?

Accepted Answer

A Spinning Top has a larger body relative to its shadows compared to a Doji

Answer

A Spinning Top has a small but visible real body with upper and lower shadows, while a Doji has virtually no body because open and close prices are essentially equal.

Question 2

The 'Three White Soldiers' pattern is a bullish continuation signal when:

Accepted Answer

Three consecutive long white candles appear after a downtrend reversal or during a consolidation, each closing near the high

Answer

Three White Soldiers consists of three consecutive long bullish candles, each opening within the prior body and closing near its high, signaling strong and sustained buying momentum.

Question 3

A 'Dark Cloud Cover' pattern signals bearish reversal when:

Accepted Answer

The second candle opens above the prior candle's high and closes below the midpoint of the first bullish candle

Answer

Dark Cloud Cover occurs when a bearish candle opens above the prior bullish candle's high but closes below its midpoint, indicating that sellers have seized control from buyers.

Question 4

Which candlestick pattern is the inverse of the Hammer and appears at the top of an uptrend?

Accepted Answer

Hanging Man

Answer

The Hanging Man looks identical to a Hammer (small body, long lower shadow) but appears after an uptrend, signaling that selling pressure is beginning to emerge at the highs.

Question 5

What is a 'Harami' candlestick pattern?

Accepted Answer

A two-candle pattern where a small candle's body is contained within the prior larger candle's body

Answer

A Harami (Japanese for 'pregnant') features a large candle followed by a smaller candle whose body is completely within the prior candle's range, suggesting a potential trend pause or reversal.

CTA - Certified Technical Analyst Practice Test

CTA - Certified Technical Analyst Practice Test

CTA Candlestick Analysis & Japanese Techniques 2