Free Access CMTAssociation.CMT-Level-II.v2022-08-18.q91 Practice Test (Page 18)

Question 81

Over a period of 4 weeks, a swing trader notices that for a particular security the ADX reading has declined from a high of 45 to a current low of 15. What tool may best help the trader isolate a trading opportunity over the next few days?

A.An Oscillator

B.A Simple Moving Average

C.An Exponential Moving Average

D.A Linear Regression Line

Question 82

Which of the following is true of contrary opinion as a technical analysis technique?

A.Contrary opinion is more useful in deciding when to exit positions than as a timing tool

B.Contrarians trade against the consensus even when it is within a normal range

C.Contrary opinion can be used as the sole decision source in entering into new trading positions

D.Once all long positions have been set, there is diminishing influence by the bulls

Question 83

Which of the following is a true statement according to Elliott Wave Theory?

A.The theory was originally applied to individual stocks and does not work as well for indices

B.Wave four should not overlap wave one

C.The theory is composed of time, ratios and wave forms, in that order of importance

D.The theory works best in commodity markets traded primarily by professional traders such agricultural futures

Question 84

Based on the chart given below; identify the best course of action:

A.Negative divergence observed between price and ROC should be ignored as prices are near life time highs.

B.Shares are losing momentum which can be confirmed by negative divergence between price and ROC; trader should be cautious and be quick to reduce position on a violation of trendline.

C.Shares are making a series of higher highs and higher lows; ROC has turned negative which is confirming the price action; should use current pullback to add to position.

D.ROC has turned negative which is a sell signal; should initiate a short position.

Question 85

Which of the following is NOT true of the rising and falling three methods patterns?

A.It starts with a long candle is followed by three short candles of the opposite color

B.The final day is another long candle of the opposite color of the three preceding small candles

C.They are continuation patterns

D.The pattern consists of a single candle

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