FREE CMT Level 1 Questions and Answers

Question 1

Taking trading diamonds into consideration how do we determine the price objective?

Accepted Answer

It is usually the distance that the entry price traveled to reach the diamond

Answer

Explanation:
The diamond formation, once properly defined, tends to have a fast-moving price run on the breakout. The price target is typically the distance traveled by the entry price to get to the gem. In general, a steep entrance is followed by a steep exit.

Question 2

Which of the following facts is not correct when talking about wedge patterns?

Accepted Answer

Both trend lines are heading in the opposite direction

Answer

Explanation:
A wedge pattern is a pattern of triangles with both trend lines going in the same direction. A rising wedge has both borders heading upward, the lower border moving faster than the upper border.

Question 3

Which of the following facts is used to distinguish between a rising and a falling wedge pattern?

Accepted Answer

The upward bound falls more quickly than the lower bound

Answer

Explanation:
The declining coil has both lines headed down, with the bounded upward falling faster than the lower bound. In the future, as in a standard triangle, the lines will cross, and the nomenclature for the crossover and height is identical.

Question 4

What is the outcome if a later rally within the channel fails to reach the channel line? Select the best possible outcome.

Accepted Answer

The last downward reversal will have a lesser slope than the underlying trend line

Answer

Explanation:
When a subsequent rally inside the channel fails to hit the channel line, the current channel line will have a lower slope than the underlying trend line from the latest downward reversal and the last downward reversal, which will ultimately follow the trend line when projected into the future.

Question 5

What is the possible outcome when the downward reversal will have a lesser slope than the underlying trend line?

Accepted Answer

It suggests that the trend line will soon be broken

Answer

Explanation:
The downward reversal would have a lower slope than the underlying trend line, which will ultimately follow the trend line if projected into the future. This new channel and trend line configuration is an ascending wedge. It indicates that sellers are a little more nervous than it implied before, and by default, that the trend line will soon split.

CMT - Chartered Market Technician Practice Test

CMT - Chartered Market Technician Practice Test

FREE CMT Level 1 Questions and Answers