Chart Patterns and Trend Analysis MCQs

MCQs on Chart Patterns and Trend Analysis

1. What is a trend in trading?
A) A direction in which the price is moving
B) A type of chart pattern
C) A method of calculating profits
D) A strategy for long-term investment
Answer: A) A direction in which the price is moving

2. Which of the following indicates a bullish trend?
A) Lower highs and lower lows
B) Higher highs and higher lows
C) Horizontal price movement
D) Random price fluctuations
Answer: B) Higher highs and higher lows

3. What does the “head and shoulders” pattern typically indicate?
A) A continuation of the current trend
B) A reversal of the current trend
C) An upward price movement
D) A stable market condition
Answer: B) A reversal of the current trend

4. In technical analysis, what does a “support level” represent?
A) A price level where selling pressure exceeds buying pressure
B) A price level where buying pressure exceeds selling pressure
C) A point of resistance for upward movement
D) An average price over a specific period
Answer: B) A price level where buying pressure exceeds selling pressure

5. Which pattern is characterized by two peaks of approximately equal height?
A) Cup and handle
B) Double top
C) Ascending triangle
D) Inverse head and shoulders
Answer: B) Double top

6. What is the significance of a “breakout” in trend analysis?
A) It indicates a false price movement
B) It confirms the reversal of the trend
C) It signals the price moving outside a defined support or resistance level
D) It shows no change in market direction
Answer: C) It signals the price moving outside a defined support or resistance level

7. Which of the following chart patterns is typically a continuation pattern?
A) Head and shoulders
B) Flag
C) Double bottom
D) Rounding bottom
Answer: B) Flag

8. What does a “descending triangle” pattern usually suggest?
A) Bullish trend
B) Bearish trend
C) Sideways market
D) Increased volatility
Answer: B) Bearish trend

9. What is the primary use of trendlines in chart analysis?
A) To predict random price movements
B) To measure volatility
C) To identify the direction and strength of a trend
D) To calculate the average price
Answer: C) To identify the direction and strength of a trend

10. Which time frame is often used to analyze long-term trends?
A) 1-minute chart
B) 5-minute chart
C) Daily chart
D) Hourly chart
Answer: C) Daily chart