Technical Analysis

Question 1

What is technical analysis?

Answer 1

Technical analysis is the study of past market data, primarily price and volume, to forecast future price movements.

Question 2

True or False: Technical analysis relies on fundamental data.

Answer 2

False

Question 3

What is a trend in technical analysis?

Answer 3

A trend is the general direction in which the price of an asset is moving.

Question 4

Fill in the blank: A __________ is a graphical representation of price movements over time.

Answer 4

chart

Question 5

What are support and resistance levels?

Answer 5

Support levels are price points where a downtrend can be expected to pause due to a concentration of demand, while resistance levels are price points where an uptrend can be expected to pause due to a concentration of supply.

Question 6

What is a moving average?

Answer 6

A moving average is a statistical calculation that helps smooth out price data by creating a constantly updated average price.

Question 7

True or False: A bullish trend indicates that prices are expected to fall.

Answer 7

False

Question 8

What does RSI stand for?

Answer 8

Relative Strength Index

Question 9

Multiple Choice: Which of the following is a common indicator used in technical analysis? A) GDP B) MACD C) Inflation Rate

Answer 9

B) MACD

Question 10

What is the purpose of volume in technical analysis?

Answer 10

Volume measures the number of shares or contracts traded in a security or market during a given period, indicating the strength of a price movement.

Question 11

Fill in the blank: __________ patterns are formations that appear on charts and indicate potential future price movements.

Answer 11

Chart

Question 12

What does the term ‘breakout’ mean?

Answer 12

A breakout occurs when the price moves outside of a defined support or resistance level.

Question 13

True or False: Candlestick patterns are used to predict future price movements.

Answer 13

True

Question 14

What does MACD stand for?

Answer 14

Moving Average Convergence Divergence

Question 15

Multiple Choice: Which of the following is NOT a type of chart? A) Line Chart B) Bar Chart C) Pie Chart

Answer 15

C) Pie Chart

Question 16

What is a bearish divergence?

Answer 16

A bearish divergence occurs when the price of an asset rises while the oscillator (like RSI) falls, indicating weakening momentum.

Question 17

Fill in the blank: The __________ is a line that indicates the average price over a specific period.

Answer 17

moving average

Question 18

What is the significance of the 200-day moving average?

Answer 18

The 200-day moving average is often used as a long-term trend indicator, with prices above it indicating a bullish trend and prices below indicating a bearish trend.

Question 19

True or False: Technical analysis can be applied to any market, including stocks, forex, and commodities.

Answer 19

True

Question 20

What is the primary assumption of technical analysis?

Answer 20

The primary assumption is that all information is already reflected in the price of the asset.

Question 21

What is the purpose of backtesting in technical analysis?

Answer 21

Backtesting is used to evaluate the effectiveness of a trading strategy by applying it to historical data.

Question 22

Fill in the blank: A __________ is a tool used to gauge market momentum.

Answer 22

momentum indicator

Question 23

What does the term ‘whipsaw’ refer to?

Answer 23

A whipsaw refers to a market condition where an asset’s price moves sharply in one direction and then quickly reverses direction.

Question 24

Multiple Choice: Which of the following is a lagging indicator? A) RSI B) MACD C) Bollinger Bands

Answer 24

B) MACD