You have already completed the quiz before. Hence you can not start it again.
Quiz is loading...
You must sign in or sign up to start the quiz.
You have to finish following quiz, to start this quiz:
Results
0 of 10 questions answered correctly
Your time:
Time has elapsed
You have reached 0 of 0 points, (0)
Categories
Not categorized0%
1
2
3
4
5
6
7
8
9
10
Answered
Review
Question 1 of 10
1. Question
What does the support point indicate in the trendline?
I. A support level is price points that clearly indicate at what price levels the demand or the supply for a particular commodity rests.
II. Support is a significant area in which buying interest develops, has developed, or is expected to develop based on past history.
III. Support becomes evident on a price chart, as the market “bounces off support” or “holds support.”
IV. It is an area in which a small short, or perhaps multiple shorts, look to cover their positions to take profits or exit a losing position.
Correct
Support and resistance
Support and resistance levels are price points that can clearly indicate at what price levels the demand or the supply for a particular commodity rests. Think of them as floors and ceilings. Simply put, support is a significant area in which buying interest develops, has developed, or is expected to develop based on past history. Support becomes evident on a price chart, as the market “bounces off support” or “holds support.”
Incorrect
Support and resistance
Support and resistance levels are price points that can clearly indicate at what price levels the demand or the supply for a particular commodity rests. Think of them as floors and ceilings. Simply put, support is a significant area in which buying interest develops, has developed, or is expected to develop based on past history. Support becomes evident on a price chart, as the market “bounces off support” or “holds support.”
Question 2 of 10
2. Question
Which of the following statements is/are true regarding resistance?
I. Resistance is the mirror image of support.
II. This is a level where the market has a hard time moving higher or where a market has trouble getting above a certain point.
III. Resistance is an area in which the buying interest is greater than the demand.
IV. If a market continues to fail at a certain resistance level, the sellers become bolder every time that price is reached, and the buyers assume that this is the place to enter.
Correct
The mirror image of support, the ceiling, is called resistance. This is a level where the market has a hard time moving higher or where a market has trouble getting above a certain point. If cotton rallies to 10000, then tail off to 9700 and back up to 9995, and it does this more than once, this is the level (at least temporarily) of resistance. In other words, resistance is an area in which the selling interest is greater than the demand.
Support and resistance levels can be drawn graphically by using a horizontal line on a bar, chart connecting the floor points, in the case of support, and ceiling points, in the case of resistance. These are important levels that indicate the areas you would expect a market to hold or to fail. As with trendline points, traders are cognizant of where support and resistance levels are. As a result, they can become a self-fulfilling prophecy, at least in the short run. If a market continues to fail at a certain resistance level, the sellers become bolder every time that price is reached, and the buyers assume that this is the place to exit.
Incorrect
The mirror image of support, the ceiling, is called resistance. This is a level where the market has a hard time moving higher or where a market has trouble getting above a certain point. If cotton rallies to 10000, then tail off to 9700 and back up to 9995, and it does this more than once, this is the level (at least temporarily) of resistance. In other words, resistance is an area in which the selling interest is greater than the demand.
Support and resistance levels can be drawn graphically by using a horizontal line on a bar, chart connecting the floor points, in the case of support, and ceiling points, in the case of resistance. These are important levels that indicate the areas you would expect a market to hold or to fail. As with trendline points, traders are cognizant of where support and resistance levels are. As a result, they can become a self-fulfilling prophecy, at least in the short run. If a market continues to fail at a certain resistance level, the sellers become bolder every time that price is reached, and the buyers assume that this is the place to exit.
Question 3 of 10
3. Question
What does the breakout from resistance indicate in a trendline?
I. When a market is in a relatively flat range (holding at support and failing at resistance), it’s called consolidation.
II. Consolidation is an ability by either the bulls or the bears to win the battle.
III. When the market holds at some level, rallies, and then again retreats to that same level, it then appears cheap. Bulls that missed the first rally feel as if they have a second chance at “cheap” levels and step up to the plate.
IV. The shorts, especially those who are scalping and selling at lower levels, see the market start to bounce, and they’re induced to cover their shorts before their paper profits disappear. This additional buying (short covering) adds fuel to the bull move.
Correct
Breakouts from consolidation
Think of a market bouncing off “support” as being similar to a ball bouncing off the floor. If the floor is a deck four stories off the ground, the ball will bounce as long it remains on the deck. But, if it subsequently falls off the deck, it drops lower. Alternatively, “resistance” is similar to a ceiling, but if a glass ceiling is smashed, the birds are free to fly higher.
Support and resistance levels are very important to traders. When a market is in a relatively flat range (holding at support and failing at resistance), it’s called consolidation. Consolidation is an inability by either the bulls or the bears to win the battle. When the market holds at some level, rallies, and then again retreats to that same level, it then appears cheap. Bulls that missed the first rally feel as if they have a second chance at “cheap” levels and step up to the plate. The shorts, especially those who are scalping and selling at higher levels, see the market start to bounce, and they’re induced to cover their shorts before their paper profits disappear. This additional buying (short covering) adds fuel to the bull move. The reverse occurs when the market rallies to the level of previous failure —the resistance point. Some of the longs who previously purchased at support might feel that the market is looking expensive and cash in. Bears, who missed selling the last rally, will consider this a “second chance” and start selling. The market starts its retreat, and other longs (who do not want to see their paper profits disappear) sell out, adding fuel to the bear fire. We know that if a market fails at a resistance level on numerous occasions and over a significant period of time, and then proceeds to trade above that level, this is a sign that the bears have lost the battle. The buying interest was finally strong enough to overwhelm the selling interest, and the defensive ceiling built by the bears has been shattered. (The opposite is happening if a support level is broken.) In simpler terms, a break above resistance or below support indicates that a major shift is probably taking place in the supply and demand fundamentals of the market in
question.
Incorrect
Breakouts from consolidation
Think of a market bouncing off “support” as being similar to a ball bouncing off the floor. If the floor is a deck four stories off the ground, the ball will bounce as long it remains on the deck. But, if it subsequently falls off the deck, it drops lower. Alternatively, “resistance” is similar to a ceiling, but if a glass ceiling is smashed, the birds are free to fly higher.
Support and resistance levels are very important to traders. When a market is in a relatively flat range (holding at support and failing at resistance), it’s called consolidation. Consolidation is an inability by either the bulls or the bears to win the battle. When the market holds at some level, rallies, and then again retreats to that same level, it then appears cheap. Bulls that missed the first rally feel as if they have a second chance at “cheap” levels and step up to the plate. The shorts, especially those who are scalping and selling at higher levels, see the market start to bounce, and they’re induced to cover their shorts before their paper profits disappear. This additional buying (short covering) adds fuel to the bull move. The reverse occurs when the market rallies to the level of previous failure —the resistance point. Some of the longs who previously purchased at support might feel that the market is looking expensive and cash in. Bears, who missed selling the last rally, will consider this a “second chance” and start selling. The market starts its retreat, and other longs (who do not want to see their paper profits disappear) sell out, adding fuel to the bear fire. We know that if a market fails at a resistance level on numerous occasions and over a significant period of time, and then proceeds to trade above that level, this is a sign that the bears have lost the battle. The buying interest was finally strong enough to overwhelm the selling interest, and the defensive ceiling built by the bears has been shattered. (The opposite is happening if a support level is broken.) In simpler terms, a break above resistance or below support indicates that a major shift is probably taking place in the supply and demand fundamentals of the market in
question.
Question 4 of 10
4. Question
Which of the following are the rules for trading breakouts from consolidation?
I. The longer it takes to form a consolidation, the more significant the breakout and the bigger the expected move to follow.
II. After a breakout occurs, the market can retrace back to the breakout level, but it really shouldn’t trade back into the consolidation zone. If it does, the odds of a false breakout increase.
III. Watch the volume on the breakout since a true breakout is generally associated with a sharp rise in price.
IV. When trading a breakout using stops, always place your stops just below support or just above resistance. All the amateurs do this, and they become bait for running the stops.
Correct
Six rules for trading breakouts from consolidation
Breakouts from consolidation are such powerful indicators of potential trend changes that you should never become complacent when they occur just because false breakouts exist. Here are my six rules for trading breakouts from consolidation:
1. The longer it takes to form a consolidation, the more significant the breakout and the bigger the expected move to follow. A breakout on a daily chart is more powerful than a breakout on a 30-minute chart, and a breakout on a weekly chart is even more powerful. A breakout from
consolidation on a yearly chart is the most powerful, signifying some major fundamental change in the supply-and-demand balance of that
market.
2. After a breakout occurs, the market can retrace back to the breakout level, but it really shouldn’t trade back into the consolidation zone. If it does, the odds of a false breakout increase.
3. The breakout should remain above the breakout level for a significant amount of time. After it moves above the resistance or below the support, you shouldn’t be in much trouble if you went with the breakout. If profits are not forthcoming in a reasonable amount of time, be wary. A quick failure is a symptom of a false breakout.
4. Watch the volume on the breakout since a true breakout is generally associated with a sharp rise in volume. Sometimes this high-volume level might precede the breakout by a day or two; however, false breakouts are usually associated with the modest volume.
5. When trading a breakout using stops, never place your stops just below support or just above resistance. All the amateurs do this, and they become bait for running the stops. It’s generally better to take a bit more risk (what
I term a “buffer”) and place your stop at a slightly greater distance.
6. A basic rule of thumb, which truly does work (use some judgment here), is that when a market breaks out from consolidation, it will move roughly the distance up or down equal to the horizontal distance of the consolidation phase. I term this phenomenon “the count.” The longer the consolidation, the bigger the count. To determine the count, measure the horizontal distance of the consolidation and then measure upward from the resistance breakout or downward from the support breakout to get an idea of the price objective for the coming move.
Incorrect
Six rules for trading breakouts from consolidation
Breakouts from consolidation are such powerful indicators of potential trend changes that you should never become complacent when they occur just because false breakouts exist. Here are my six rules for trading breakouts from consolidation:
1. The longer it takes to form a consolidation, the more significant the breakout and the bigger the expected move to follow. A breakout on a daily chart is more powerful than a breakout on a 30-minute chart, and a breakout on a weekly chart is even more powerful. A breakout from
consolidation on a yearly chart is the most powerful, signifying some major fundamental change in the supply-and-demand balance of that
market.
2. After a breakout occurs, the market can retrace back to the breakout level, but it really shouldn’t trade back into the consolidation zone. If it does, the odds of a false breakout increase.
3. The breakout should remain above the breakout level for a significant amount of time. After it moves above the resistance or below the support, you shouldn’t be in much trouble if you went with the breakout. If profits are not forthcoming in a reasonable amount of time, be wary. A quick failure is a symptom of a false breakout.
4. Watch the volume on the breakout since a true breakout is generally associated with a sharp rise in volume. Sometimes this high-volume level might precede the breakout by a day or two; however, false breakouts are usually associated with the modest volume.
5. When trading a breakout using stops, never place your stops just below support or just above resistance. All the amateurs do this, and they become bait for running the stops. It’s generally better to take a bit more risk (what
I term a “buffer”) and place your stop at a slightly greater distance.
6. A basic rule of thumb, which truly does work (use some judgment here), is that when a market breaks out from consolidation, it will move roughly the distance up or down equal to the horizontal distance of the consolidation phase. I term this phenomenon “the count.” The longer the consolidation, the bigger the count. To determine the count, measure the horizontal distance of the consolidation and then measure upward from the resistance breakout or downward from the support breakout to get an idea of the price objective for the coming move.
Question 5 of 10
5. Question
Which of the following is/are included in reversal patterns in the classic chart pattern?
I. Head and shoulders
II. Single tops and bottoms
III. Rounding tops and bottoms
IV. Several days.
Correct
Additional classic chart patterns
Chart patterns basically fall into two groups:
• Those signaling a reversal in trend
• Those signaling a continuation in the prevailing trend
Reversal patterns include the head and shoulders, double tops and bottoms, rounding tops and bottoms, and reversal days. Continuation patterns include flags and pennants. Certain patterns are hybrids that can signal either or both; gaps and triangles for example. The following sections explain the classic patterns, which I have found remain valid today.
Incorrect
Additional classic chart patterns
Chart patterns basically fall into two groups:
• Those signaling a reversal in trend
• Those signaling a continuation in the prevailing trend
Reversal patterns include the head and shoulders, double tops and bottoms, rounding tops and bottoms, and reversal days. Continuation patterns include flags and pennants. Certain patterns are hybrids that can signal either or both; gaps and triangles for example. The following sections explain the classic patterns, which I have found remain valid today.
Question 6 of 10
6. Question
Which of the following is/are included in the continuation pattern of classic chart pattern?
I. Flags and pennants
II. Square tops and bottoms
III. Continuation tops and bottoms
IV. Head and shoulders
Correct
Additional classic chart patterns
Chart patterns basically fall into two groups:
• Those signaling a reversal in trend
• Those signaling a continuation in the prevailing trend
Reversal patterns include the head and shoulders, double tops and bottoms, rounding tops and bottoms, and reversal days. Continuation patterns include flags and pennants. Certain patterns are hybrids that can signal either or both; gaps and triangles for example. The following sections explain the classic patterns, which I have found remain valid today.
Incorrect
Additional classic chart patterns
Chart patterns basically fall into two groups:
• Those signaling a reversal in trend
• Those signaling a continuation in the prevailing trend
Reversal patterns include the head and shoulders, double tops and bottoms, rounding tops and bottoms, and reversal days. Continuation patterns include flags and pennants. Certain patterns are hybrids that can signal either or both; gaps and triangles for example. The following sections explain the classic patterns, which I have found remain valid today.
Question 7 of 10
7. Question
Which of the following is/are the features of the double tops and bottoms in a chart pattern?
I. Double tops occur when prices rally from an area close to a previous low, but then the market fails, with an inability to continue decisively into the new high territory.
II. Double tops are formed when a market just nicks or even at times moves slightly above the previous high and then fails.
III. Double tops are with the right mast at times a bit lower or a bit higher than the left. Double bottoms are the market makes a major bottom, rallies, fails and holds slightly above or slightly below the previous bottom, and then it reverses.
IV. The one problem with double tops and bottoms is that they always occur at the top or the bottom.
Correct
Double tops and bottoms
Double tops and bottoms are reversal patterns, many times associated with major tops and bottoms. Double tops occur when prices rally from an area close to a previous high, but then the market fails, with an inability to continue decisively into the new high territory. I’m trying to be careful in my choice of words because many novice traders believe a double top is valid only if a market falls under the previous top. I’ve found, in practice, that many times double tops are formed when a market just nicks or even at times moves slightly above the previous high and then fails. Think of double tops as the letter M, with the right mast at times a bit lower or a bit higher than the left.
Double bottoms are the mirror image of the tops. Think of them as the letter W. The market makes a major bottom, rallies, fails and holds slightly above or slightly below the previous bottom, and then it reverses.
Figure 8.13. Double top and double bottom The one problem with double tops and bottoms is that they don’t always occur at the top or the bottom. You have to be careful because, many times, you’ll see these in the middle of moves (which obviously doesn’t help in identifying a top or a bottom). As I’ve stated before, there is no holy grail. All you can hope to do is place the odds in your favor, using good money management to cut the losses on the trades that don’t go according to plan. To avoid false signals, it is important to wait until the pattern is completed. This removes some of the profit potentials but also improves your odds. Make sure you look for double bottoms and tops only after a major top or bottom is made and then wait for the market to test the low/high and then rally/break significantly, which increases its validity.
How much is “significant”? Unfortunately, I can’t give you a number, but after you have been doing this awhile, and after studying hundreds of charts, you’ll get a feel for this in various market situations.
Incorrect
Double tops and bottoms
Double tops and bottoms are reversal patterns, many times associated with major tops and bottoms. Double tops occur when prices rally from an area close to a previous high, but then the market fails, with an inability to continue decisively into the new high territory. I’m trying to be careful in my choice of words because many novice traders believe a double top is valid only if a market falls under the previous top. I’ve found, in practice, that many times double tops are formed when a market just nicks or even at times moves slightly above the previous high and then fails. Think of double tops as the letter M, with the right mast at times a bit lower or a bit higher than the left.
Double bottoms are the mirror image of the tops. Think of them as the letter W. The market makes a major bottom, rallies, fails and holds slightly above or slightly below the previous bottom, and then it reverses.
Figure 8.13. Double top and double bottom The one problem with double tops and bottoms is that they don’t always occur at the top or the bottom. You have to be careful because, many times, you’ll see these in the middle of moves (which obviously doesn’t help in identifying a top or a bottom). As I’ve stated before, there is no holy grail. All you can hope to do is place the odds in your favor, using good money management to cut the losses on the trades that don’t go according to plan. To avoid false signals, it is important to wait until the pattern is completed. This removes some of the profit potentials but also improves your odds. Make sure you look for double bottoms and tops only after a major top or bottom is made and then wait for the market to test the low/high and then rally/break significantly, which increases its validity.
How much is “significant”? Unfortunately, I can’t give you a number, but after you have been doing this awhile, and after studying hundreds of charts, you’ll get a feel for this in various market situations.
Question 8 of 10
8. Question
Which of the following is also called saucer bottoms?
Correct
Rounding tops and bottoms
Rounding bottoms are sometimes referred to as saucer bottoms
Incorrect
Rounding tops and bottoms
Rounding bottoms are sometimes referred to as saucer bottoms
Question 9 of 10
9. Question
What is/are the features of the rectangle patterns?
I. Rectangles, at times called “boxes,” are formations where the market starts and proceeds to trade in a tight range.
II. A rectangle is like a consolidation but much smaller in length. Unlike a consolidation, a rectangle occurs after a move is underway—not at a top or bottom.
III. The upper line of the rectangle is the support line, and the lower line is the resistance line. In an uptrend, buy on the break of resistance, and in a downtrend, go short on the break of support.
IV. Rectangles basically represent pauses in the major trend; the market remains fundamentally bullish or bearish, but it has to first undergo a “healthy” round of repositioning or profit-taking before a resumption of the move. Volume generally increases during this box-like formation and dries up the breakout.
Correct
Flags, rectangles, and pennants
Flags, rectangles, and pennants are three relatively common continuation patterns. They generally occur in the first third, middle, or second third of major moves and can be good formations to pyramid from using fairly tight stops.
Rectangles, at times called “boxes,” are formations where the market pauses and proceeds to trade in a tight range. A rectangle is like a consolidation but much smaller in length. Unlike a consolidation, a rectangle occurs after a move is underway—not at a top or bottom. It is generally a price movement that is contained between two horizontal lines, as shown in Figure 8.15.
The upper line of the rectangle is the resistance line, and the lower line is the support line. The plan is not to anticipate but rather to go with the flow. In an uptrend, buy on the break of resistance, and in a downtrend, go short on the break of support. Rectangles basically represent pauses in the major trend; the market remains fundamentally bullish or bearish, but it has to first undergo a “healthy”
round of repositioning or profit-taking before a resumption of the move. Volume generally dries up during this box-like formation and increases on the breakout.
Just like in the neckline of the head and shoulders (explained shortly), many times the market returns to the breakout level after it takes place. Rectangles provide an excellent time to pyramid a winning position. I look to add to profitable positions after the breakout, moving my stop on the total position to above or below the opposite boundary of the box.
One drawback of rectangles is that they are continuation patterns, which at times can revert into reversal patterns. Once again, be warned: Keep an open mind and be nimble.
Incorrect
Flags, rectangles, and pennants
Flags, rectangles, and pennants are three relatively common continuation patterns. They generally occur in the first third, middle, or second third of major moves and can be good formations to pyramid from using fairly tight stops.
Rectangles, at times called “boxes,” are formations where the market pauses and proceeds to trade in a tight range. A rectangle is like a consolidation but much smaller in length. Unlike a consolidation, a rectangle occurs after a move is underway—not at a top or bottom. It is generally a price movement that is contained between two horizontal lines, as shown in Figure 8.15.
The upper line of the rectangle is the resistance line, and the lower line is the support line. The plan is not to anticipate but rather to go with the flow. In an uptrend, buy on the break of resistance, and in a downtrend, go short on the break of support. Rectangles basically represent pauses in the major trend; the market remains fundamentally bullish or bearish, but it has to first undergo a “healthy”
round of repositioning or profit-taking before a resumption of the move. Volume generally dries up during this box-like formation and increases on the breakout.
Just like in the neckline of the head and shoulders (explained shortly), many times the market returns to the breakout level after it takes place. Rectangles provide an excellent time to pyramid a winning position. I look to add to profitable positions after the breakout, moving my stop on the total position to above or below the opposite boundary of the box.
One drawback of rectangles is that they are continuation patterns, which at times can revert into reversal patterns. Once again, be warned: Keep an open mind and be nimble.
Question 10 of 10
10. Question
Which of the following statements is/are true for Flag patterns?
I. A flag is basically a rectangle whose boundaries slant upward or downward.
II. The boundaries are parallel, like a rectangle. The “flag” is a pause due to profit-taking by the weak hands.
III. The general rule is that the slant of a flag will run in the same direction of the major price trend.
IV. Many powerful moves out of flag congestions come from those slanting in the opposite direction of the major trend.
Correct
A flag is basically a rectangle whose boundaries slant upward or downward. The boundaries are parallel, like a rectangle. The “flag” is, again, a pause due to profit-taking by the weak hands, a rest stop before the train once again rolls out of the station.
Flag and pennant The general rule is that the slant of a flag will run opposite the direction of the major price trend, but this isn’t always the case. Actually, contrary to popular belief, I’ve found that many powerful moves out of flag congestions come from
those slanting in the direction of the major trend.
Incorrect
A flag is basically a rectangle whose boundaries slant upward or downward. The boundaries are parallel, like a rectangle. The “flag” is, again, a pause due to profit-taking by the weak hands, a rest stop before the train once again rolls out of the station.
Flag and pennant The general rule is that the slant of a flag will run opposite the direction of the major price trend, but this isn’t always the case. Actually, contrary to popular belief, I’ve found that many powerful moves out of flag congestions come from
those slanting in the direction of the major trend.
Hi, Aiden here, co-founder of Certdemy. I hope you liked it and enjoy our service. We are a group of professional who has been in your position right now – taking exams.
You have already paid for the expensive exam registration fee and it makes no sense to pay for another exam prep tool just because you are working hard on your career for your family and future.
That is why we provide all the top-notch, premium practice questions which are normally charged at over USD200 per exam preparation tools to you completely for free.
But we need your help and I am not asking for a donation. It comes with a huge running cost to hire exam professionals to craft the questions, pay for the domain, hosting fee, and web maintenance.
If this is not much to ask for, can you spend 5 seconds of your time and share our service to your favorite forums, friends & colleagues so that they can also enjoy our service and help us keep this place running? Thanks so much in advance if you have already done so!
To your success,
Aiden D. Lucas We earn a commission for each qualified sales with no additional cost to you as amazon associate