Day Trading (Candlestick Pattern) Test #1

Question 1

What does this candle pattern's name mean?

Accepted Answer

Morning Star

Answer

The candle pattern shown is a Morning Star, which is a bullish reversal pattern typically found at the bottom of a downtrend. It consists of three candles: a long bearish candle, followed by a small-bodied candle (often a doji or spinning top) that gaps down, and finally a long bullish candle that closes significantly into the body of the first bearish candle, signaling a potential shift from selling to buying pressure.

Question 2

The candle shown is known as a____________.

Accepted Answer

Hammer Candle

Answer

The candle displayed is known as a Hammer candle, which is a bullish reversal pattern. It is characterized by a small body located at the upper end of the trading range, a long lower wick that is typically at least twice the length of the body, and little to no upper wick. This pattern suggests that despite initial selling pressure, buyers stepped in strongly to push the price back up, indicating potential upward momentum.

Question 3

What does this candle pattern's name mean?

Accepted Answer

Shooting Star

Answer

The candle pattern depicted is a Shooting Star, which is a bearish reversal pattern that typically forms after an uptrend. It features a small body near the bottom of the candle's range, a long upper wick (at least twice the length of the body), and little to no lower wick. This pattern indicates that buyers initially pushed prices higher, but sellers then took control and drove the price back down, suggesting a potential reversal to a downtrend.

Question 4

What do these candle types stand for in the marketplace.

Accepted Answer

Indecision

Answer

The candle types shown, known as Doji candles, signify indecision in the marketplace. A Doji forms when the opening and closing prices of an asset are virtually the same, resulting in a very small or non-existent body. This pattern suggests a balance between buying and selling pressures, indicating that neither bulls nor bears were able to gain control, often preceding a potential trend reversal or a period of consolidation.

Question 5

Give the right names for the A, B, C, and D points on this candle.

Accepted Answer

A=HIGH B=CLOSE C=OPEN D=LOW

Answer

A candlestick visually represents price action over a specific period. Point A indicates the highest price reached during that period (HIGH), and point D represents the lowest price (LOW). For a bullish candle (typically green, meaning the closing price was higher than the opening price), point B is the closing price (CLOSE), and point C is the opening price (OPEN), as the price moved upwards from open to close.

Day Trading Practice Test

Day Trading Practice Test

Day Trading (Candlestick Pattern) Test #1