Trading Jobs Technical Analysis for Traders 2

Question 1

A 'double top' chart pattern is primarily a signal of:

Accepted Answer

A bearish reversal indicating that buyers failed twice to break through resistance

Answer

A double top forms when price reaches a resistance level twice but fails to break through, signaling that buying momentum is exhausted and a bearish reversal is likely.

Question 2

Bollinger Bands consist of which three components?

Accepted Answer

A simple moving average and two standard deviation bands above and below it

Answer

Bollinger Bands consist of a middle simple moving average (typically 20-day) with an upper band and lower band set two standard deviations above and below it.

Question 3

What does a 'death cross' occur when?

Accepted Answer

A short-term moving average crosses below a long-term moving average

Answer

A death cross occurs when a short-term moving average (e.g., 50-day) crosses below a long-term moving average (e.g., 200-day), signaling potential bearish momentum.

Question 4

What is the primary use of Fibonacci retracement levels in trading?

Accepted Answer

To identify potential support and resistance levels where a price pullback may reverse

Answer

Fibonacci retracement levels (23.6%, 38.2%, 50%, 61.8%) are used to identify potential support and resistance zones where a corrective pullback may find reversal points.

Question 5

An 'inverted hammer' candlestick pattern appearing at the bottom of a downtrend most likely suggests:

Accepted Answer

A potential bullish reversal as buyers attempted to push prices higher

Answer

An inverted hammer at a downtrend's bottom suggests buyers tried to push prices higher during the session, indicating potential bullish reversal when confirmed by the next candle.

Trading Jobs Practice Test

Trading Jobs Practice Test

Trading Jobs Technical Analysis for Traders 2