Technical Support covering downloading of Global Equities, Indices, Sectors, Distribution List and Database Maintenance

Quiz Part 2 - Technical Analysis - An Introduction to Charting

Successful completion = 36/42

What is Technical Analysis?

1. Which of the following statements is false in describing the objectives of Technical Analysis?

a) To gauge the relative strength of buyers and sellers;
b) To obtain an insight into the goods in which a company deals
c) To identify preferred times to buy and sell
d) To develop a theory as to how far prices may reasonably be expected to move;

2. Technical Analysis Principals

"While markets do sometimes trend, generally speaking they are comprised of random price movements."

True or False?

3. Technical Indicators

When assessing charts, it is acceptable to use any single indicator, if both:

a) that indicator is approved by a registered professional Technical Analysis association, and
b) a thorough assessment of the economy has been made.

True or False?

4. What Technical Analysis Isn't

Are all the following statements True or False?

a) It is impossible to consistently predict what the market will do tomorrow or at a specific time in the future.
b) With prudent money management and a well thought trading plan it is possible to consistently make money in the markets.
c) Technical Analysis is a systematic approach to evaluating historical and future price direction.

True or False?

Individuality and Investing

5. A Common Sense Approach

We must realise that, having finite capital, managing our investments (and having funds tied up within those investments) means that we may miss out on other profitable opportunities. This is referred to as:

a) Financial (or capital) risk
b) Emotional energy or stress
d) Opportunity risk
e) Limited potential risk

6. Risk vs. Reward

Select which most accurately describes the level of risk applicable to medium-term investment.

Short Term - High Risk, High Reward

Medium Term - _______ Risk, Medium Reward

Long Term - Low Risk, Low Reward

a) Low
b) Medium
c) High

7. What Does an Investor Need?

Which type of investor would find the following tools appropriate for their investment style?

-Training and Education
-Fundamental and technical analysis software
-Portfolio Management tools
-Predominately a strategy focusing on companies with good fundamentals, with price momentum a lesser consideration.
-Weekly price data, news and information
-Fundamentals Data
-Broker Facilities

a) The short-term Investor
b) The medium-term Investor
c) The long-term Investor

Price Studies

8. Line Charts

Which of the 4 charts shown below is a Line Chart?

9. Bar Charts

In the example below, we see that the close price of the Day 1 is lower than the opening price of Day 2. How can we account for this?

a) There may have been a weekend or public holiday between Day 1 and Day 2
b) Buyer demand created overnight, after Day 1 has ended, can mean that the prices may "gap up", and open higher when trading begins on Day 2.
c) An error in the reporting of prices for the Day 2

10. Candlestick Charts

a) Within the section of chart below, one bar best represent a Long White Line. Locate this bar

b). Within the section of chart below, one bar best represent a Hammer. Locate this bar.

c). Within the section of chart below, we can see a bullish Piercing Line pattern, comprising of two bars. Locate this pattern.

d). Within the section of chart below, we can see a Bullish Engulfing Line pattern, comprising of two bars. Locate this pattern.

e). Locate the price bar that confirms that the bullish Engulfing pattern is, in fact a turning point in the market.

f). Within the section of chart below, we can see a Morning Star pattern, comprising of three bars. Locate this pattern.

g). Within the section of chart below, we can see a bullish Doji Star pattern. Locate this pattern.

h). Within the section of chart below, one bar best represents a Long Black Line. Locate this bar.

i). Within the section of chart below, one bar best represents a Hanging Man. Locate this bar.

j). Within the section of chart below, we can see a bearish Dark Cloud Cover pattern comprising of two bars. Locate this pattern.

k). Within the section of chart below, we can see a Bearish Engulfing Lines pattern, comprising of two bars. Locate this pattern.

l). Within the section of chart below, we can see an Evening Star pattern, comprising of three bars. Locate this pattern.

m). Within the section of chart below, we can see a bearish Doji Star pattern. Locate this pattern.

n). Within the section of chart below, we can see a single bar Shooting Star pattern. Locate this bar.

o). Within the section of chart below, we can see a Long Legged Doji bar. Locate this bar.

p). Locate the price bar that confirms that the Long Legged Doji confirms a reversal.

q). Locate the price bar that confirms that the Dragon Fly Doji has proven to be a turning point.

r). A Gravestone Doji appears within this section of the chart comprising a single bar. Locate this bar.

s). Locate the price bar that confirms that he Gravestone Doji has proven to be a turning point

Trend Lines

11. Trendlines

Non-trending markets...

a) ...represent excellent trading and investing opportunities
b) ...are worth watching carefully as price "explosions" often result from them
c) ...typically offer less investment opportunities than trending markets

12. Trend Channels

Assuming that the charts below are daily charts, which one represent a longer, more established trend.

13. Reversal of Trends

Imagine a situation where, during the trading day, the price of a security drops below an established trendline, or breaks below the lower line of a trend channel. this is sufficient for us to declare that a trend reversal has occurred, and we should look to exit a trade for that security on this basis.

True or False

Support and Resistance

14. Support and Resistance

Which answer best describes support and resistance?

1. Areas of price action based on perceptions of where prices may be in the future.
2. Areas of chart activity where we may draw arbitrary horizontal lines to show areas where prices may potentially encounter buying pressure (support), or encounter selling pressure (resistance).
3. Areas of potential demand or supply for a security by large institutions.
4. Areas of chart activity where non-technical (or fundamental) aspects of a company performance (including the release of company reports) affect zones of potential buying and selling

15. The Time Factor

Two time factors influence the efficiency of support and resistance: - firstly, the distance in the time between similar price levels and secondly -

a) the health of the general economy
b) the number of shares bought and sold
c) the amount of time a security spends at a particular level

16. Price Levels

a). Locate the area of the chart after point 1 where we can say that support has occurred.

b). Select the first bar that clearly shows that the Trendline has been broken.

Chart Patterns

17. Chart Patterns Defined

The two main categories that chart patterns fall into are Reversal and _____________

a) Technical Indicators
b) Candlestick
c) Sideways
d) Continuation
e) Support and Resistance
f) Consolidation
g) Short-term
h) Trend
i) Price Momentum

18. Reversal Patterns

a). On the chart below we see a Head and Shoulder pattern, with the neckline marked as a blue line. Locate the peak of the left "shoulder".

b). On the chart below we see a Head and Shoulder pattern, with the neckline marked as a blue line. Locate the peak of the "head"

c). After the formation to the right "shoulder", we see prices falter and break the trendline, completing the pattern. As mentioned before support when broken can become resistance, and we can see after the trendline break, the trendline is tested from below, where it becomes resistance. Select the price bar that test the trendline from below.

19. Consolidation Patterns

a). The section of chart below shows a trading range, or congestion area. In the second half of the chart we see a common upward gap. Locate the common gap

b). On the chart below we can clearly see a breakaway gap to the up side, where prices "break out" of a prevailing pattern. Locate the breakaway gap.

c). Several gaps appear on the section of chart below. Locate the gap that proves to be an exhaustion gap.

* Indicates required fields
Do you request proof of completion via:	Email Postal Mail
* Customer Name:
* Customer Address:
* Company/Dealer:
* Day Phone:
* Email Address: