Please note: This is definitely a work in progress. More questions will be added and the fomat will probably be changed as I would also like to add charts to this test as well. Anyway this is all that I currently have as I've been too busy with other parts of the website to concentrate on finishing this section.
Also note that when you take the test, you will need to grade it yourself. I'm not sure how to make it interactive with the website. Therefore, the circles you see below, clicking them does not work. I put them there so that you could print out this page and fill them in by hand. Also note, this website is "printer friendly", i.e. the site is formated so that you can print out sections from the website without having sections cut off - it all fits nicely on regular sized paper from your printer.
In the mean time, if you have suggestions or you can think of more questions for me to add to this test, email me at: matt@breakpointtrades.com
P.S. Send me some tough questions so that we can stump the members.
True or False:
1. Once support is broken, it becomes resistance.
True False
2. A symmetrical triangle is more bullish than an ascending triangle.
True False
3. There is an indirect correlation between the slope of a trendline and its importance. For example, a trendline with a 65 degree slope is more meaningful than a trendline with a 30 degree slope?
True False
4. Descending triangles have a negative bias to them, while ascending triangles have a positive bias to them.
True False
5. An ascending triangle can form at the end of a downtrend.
True False
6. In ascending, descending, and symmetrical triangles, you generally want to see the volume increase as the pattern develops.
True False
7. If an ascending triangle breaks through resistance and then falls back to retest the breakout point on declining volume, you should exit the position.
True False
8. Stock ABC breaks through resistance on strong volume and rallies for a couple of weeks. After the strong rally, the stock then moves sideways to slightly down on low volume. This declining volume after the stock rallies is very bearish.
True False
9. A Falling Wedge has a negative bias.
True False
10. When short term trading, especially for day trading, good volume is important when playing breakout stocks. A good strategy is to buy breakouts that express good volume relative to their 60 day average volume.
Consider this example: Stock ABC has resistance at $20.10 and has a 60 day average volume of 1,000,000 shares. At 12:00pm eastern standard time (which is 3 hours into the trading day), stock ABC breaks it's resistance and is now at $20.12. Upon Breakout, the current volume is only 600,000 shares which is 400,000 shares below the 60 day average volume of 1,000,000 shares. However, Stock ABC still represents a good trade and the a trader should go long ABC?
For a hint on this one, click on the "How To Play Breakouts" link on the right hand tool bar.
True False
Fill in the blank
1. If a stock makes two successive lower highs and two successive higher lows, what chart pattern is potentially forming?
2. If a stock makes two successive lower highs, but support is not broken, what chart pattern is potentially forming?
3. If a stock makes two successive higher lows, and has met resistance twice but not broken it, what potential chart pattern do we have here?
4. What kind of triangle pattern usually forms during an uptrend as a continuation pattern?
5. What is the name used when a stock’s price makes a higher high, but the MACD makes a lower high?
6. What is the name used when a stock’s price makes a lower low, but the MACD makes a higher low?
7. What type of divergence would most likely be associated with a rising wedge pattern?
8. A particular stock has been in a downtrend for many months and a clearly defined downtrend line can be drawn connecting each lower high. Recently, the stock gapped above this resistance line on very heavy volume. What would be a good course of action.
a) Short the stock because gaps are almost always filled right away.
b) Do nothing because gaps are very hard to trade and unpredictable.
c) Go long the stock because these types of gaps are bullish..
What is the name of the gap pattern in the previous question?
9. Say for instance that you are watching stock ABC as a potential short candidate because it has a descending triangle pattern. However, one day you notice that rather than falling through support, the price breaks to the upside above the descending line on increasing volume. What would be a good course of action:
a) Move on to another stock because descending triangles are supposed to break down, thus this pattern failed.
b) Go long the stock
c) Short the stock.
10. The VIX or Volatility Index usually moves in direct correlation with the Nasdaq, i.e. when the VIX goes up, so does the Nasdaq usually?
11. Fibonacci numbers are very useful in technical analysis. What are the three most commonly used numbers?
