Forex Trading Technical Analysis 2

Question 1

What does a 'golden cross' signal in forex technical analysis?

Accepted Answer

A short-term MA crosses above a long-term MA

Answer

A golden cross occurs when a shorter-term moving average (e.g., 50-day) crosses above a longer-term moving average (e.g., 200-day), signaling a bullish trend shift.

Question 2

In a Fibonacci retracement, which level is most commonly watched by forex traders as a key reversal zone?

Accepted Answer

61.8%

Answer

The 61.8% level, derived from the golden ratio, is considered the most significant Fibonacci retracement level and often acts as strong support or resistance.

Question 3

What does a bearish engulfing candlestick pattern indicate?

Accepted Answer

Potential reversal from uptrend to downtrend

Answer

A bearish engulfing pattern forms when a large red candle completely engulfs the prior green candle, signaling that sellers have taken control and a downtrend may follow.

Question 4

Which oscillator measures momentum by comparing a currency pair's closing price to its price range over a set period?

Accepted Answer

Stochastic Oscillator

Answer

The Stochastic Oscillator compares a security's closing price to its high-low range over a specified period, generating values between 0 and 100.

Question 5

What is the significance of a 'doji' candlestick in forex trading?

Accepted Answer

Market indecision and potential reversal

Answer

A doji forms when open and close prices are nearly equal, indicating market indecision and potentially foreshadowing a trend reversal.

Forex Trading Practice Test

Forex Trading Practice Test

Forex Trading Technical Analysis 2