CTA Market Structure & Price Theory

Question 1

In Dow Theory, what does a 'higher high followed by a higher low' indicate?

Accepted Answer

A confirmed uptrend

Answer

A confirmed downtrend

Answer

A market reversal

Answer

Sideways consolidation

Question 2

Which market phase in Wyckoff theory is characterized by institutional accumulation of shares at low prices?

Accepted Answer

Accumulation phase

Answer

Markup phase

Answer

Distribution phase

Answer

Markdown phase

Question 3

What is the primary purpose of identifying support and resistance levels in technical analysis?

Accepted Answer

To identify price zones where buying or selling pressure is significant

Answer

To calculate fundamental value

Answer

To predict dividend yields

Answer

To measure earnings growth

Question 4

When a former resistance level becomes support after a breakout, this phenomenon is called:

Accepted Answer

Role reversal

Answer

Price inversion

Answer

Trend continuation

Answer

Gap fill

Question 5

According to Dow Theory, a primary trend must be confirmed by:

Accepted Answer

Both the Dow Jones Industrial Average and the Dow Jones Transportation Average

Answer

Volume alone

Answer

The S&P 500 index

Answer

Moving average crossovers

Question 6

Which of the following best describes a 'trading range' in market structure?

Accepted Answer

A horizontal price band where support and resistance are roughly equal

Answer

A sustained uptrend with rising highs and lows

Answer

A period of accelerating downward momentum

Answer

A gap between two price bars