Stock Trading Stock Trading Technical Analysis & Chart Patterns 2

Question 1

What does the MACD indicator stand for?

Accepted Answer

Moving Average Convergence Divergence

Answer

MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator showing the relationship between two exponential moving averages.

Question 2

What is a 'double bottom' chart pattern?

Accepted Answer

A W-shaped pattern signaling a potential bullish reversal

Answer

A double bottom forms when price hits a low, bounces up, returns to the same low, and then rises again, forming a 'W' shape that signals a bullish reversal.

Question 3

What is the purpose of Bollinger Bands?

Accepted Answer

To measure price volatility and identify overbought/oversold conditions

Answer

Bollinger Bands plot standard deviation bands above and below a moving average, expanding in high volatility and contracting in low volatility periods.

Question 4

What does a 'doji' candlestick pattern indicate?

Accepted Answer

Indecision between buyers and sellers, with open and close nearly equal

Answer

A doji forms when a stock's open and close prices are nearly equal, creating a cross shape that indicates market indecision and potential trend reversal.

Question 5

What is the 'resistance level' in technical analysis?

Accepted Answer

A price ceiling where selling pressure tends to stall upward movement

Answer

Resistance is a price level where supply (sellers) overwhelms demand (buyers), preventing the stock from moving higher.

Stock Trading Practice Test

Stock Trading Practice Test

Stock Trading Stock Trading Technical Analysis & Chart Patterns 2