Day Trading Technical Indicators 3

Question 1

Pivot points in day trading are calculated using the previous day's:

Accepted Answer

High, Low, and Close

Answer

Standard pivot points are calculated as the average of the prior day's High, Low, and Close prices.

Question 2

What does a 'death cross' signal on a daily chart?

Accepted Answer

The 50-day SMA crossing below the 200-day SMA, signaling bearish momentum

Answer

A death cross occurs when the 50-day SMA crosses below the 200-day SMA, widely viewed as a long-term bearish signal.

Question 3

The Parabolic SAR indicator is primarily used to:

Accepted Answer

Identify potential reversal points and trailing stop levels in trending markets

Answer

Parabolic SAR plots dots above or below price to signal trend direction and provide dynamic trailing stop reference points.

Question 4

A 'squeeze' on the TTM Squeeze indicator signals that:

Accepted Answer

Bollinger Bands have contracted inside Keltner Channels, indicating a pending volatility breakout

Answer

A TTM Squeeze fires when Bollinger Bands compress inside Keltner Channels, showing low volatility that typically precedes a large directional move.

Question 5

Which indicator would a day trader most likely use to confirm that a breakout is supported by institutional participation?

Accepted Answer

Volume relative to the 50-period average volume

Answer

Comparing current volume to the average volume confirms whether large institutional players are behind a price breakout.

Day Trading Practice Test