Day Trading Technical Indicators

Question 1

What does the Relative Strength Index (RSI) primarily measure?

Accepted Answer

The speed and magnitude of recent price changes to evaluate overbought or oversold conditions

Answer

The volume of shares traded relative to average

Answer

The distance between two moving averages

Answer

The number of advancing versus declining stocks

Question 2

When a stock's price makes a new high but the RSI fails to confirm with a new high, this is called:

Accepted Answer

Bearish divergence

Answer

A golden cross

Answer

A Doji signal

Answer

Volume confirmation

Question 3

The MACD indicator is calculated by subtracting which two exponential moving averages?

Accepted Answer

12-period EMA from 26-period EMA

Answer

5-period EMA from 10-period EMA

Answer

20-period EMA from 50-period EMA

Answer

50-period EMA from 200-period EMA

Question 4

In day trading, a 'MACD crossover' buy signal occurs when:

Accepted Answer

The MACD line crosses above the signal line

Answer

The MACD histogram turns negative

Answer

The 50-day moving average crosses above the 200-day

Answer

Price closes above the upper Bollinger Band

Question 5

Bollinger Bands consist of which three components?

Accepted Answer

A simple moving average, an upper band, and a lower band set at standard deviations

Answer

High, Low, and Close lines

Answer

RSI, MACD, and volume overlay

Answer

Opening range, VWAP, and pivot points

Question 6

What does it mean when a stock's price 'walks the band' along the upper Bollinger Band?

Accepted Answer

The stock is in a strong uptrend with sustained momentum

Answer

The stock is about to reverse sharply lower

Answer

The bands are too narrow to be useful

Answer

Volume is declining relative to recent average