1. What does a hammer candlestick typically suggest when it forms after a decline?
That selling pressure may be fading as buyers pushed price back up That the market is about to gap down sharply That volume has permanently dried up That the trend is guaranteed to reverse immediately
2. A doji candle mainly signals which of the following?
A strong continuation of the current trend Indecision, since the open and close are nearly the same A confirmed breakout above resistance Extremely high trading volume
3. Why do bullish and bearish engulfing patterns often carry more weight than a single candle?
They always occur on higher timeframes only They involve two candles and show a real shift in control between buyers and sellers They only appear during consolidations They are unrelated to support and resistance levels
4. In a morning star pattern, what does the middle candle typically represent?
A confirmed new uptrend A small-bodied candle showing indecision between the down move and the up move The strongest candle in the entire pattern A gap that must occur on high volume
5. According to the support-resistance flip concept, what usually happens after a resistance level is broken with conviction?
The level disappears from the chart entirely It often becomes a new support level on the next pullback It always becomes stronger resistance again Price never returns to test that level
6. Why do old resistance levels often turn into support after a breakout?
Because indicators automatically redraw the line Because traders who missed the breakout buy the retest and short sellers buy back to cover, adding buying pressure Because volume always disappears after a breakout Because regulators require it
7. What is a false breakout (fakeout)?
A breakout that happens only on weekly charts A price move past a key level that quickly reverses, trapping traders who entered early Any breakout that occurs during a strong trend A breakout confirmed by high volume and a closing candle beyond the level
8. Which practice helps filter out false breakouts?
Entering immediately on any intrabar touch of the level Waiting for a candle to close beyond the level and looking for a retest that holds Ignoring volume entirely Only trading fakeouts during major news releases
9. Which observation suggests a trend is strengthening rather than weakening?
Pullbacks getting deeper and slower while rallies shrink Rallies covering ground quickly with short, shallow pullbacks Price stalling just below the prior swing high with a small doji Each new high being proportionally smaller than the last
10. What is one early warning sign that an uptrend may be losing strength, even before it technically reverses?
Higher highs becoming proportionally smaller over successive swings Every pullback becoming shorter and shallower Volume expanding on every new high Price breaking decisively through old resistance
11. How does a consolidation (ranging) phase typically look on a chart?
Clear higher highs and higher lows with no pullbacks A horizontal band where price bounces between a defined ceiling and floor without much net progress A single vertical spike followed by silence Constant lower lows with no bounces
12. Why do consolidations often occur after a strong trending move?
Because trends can never resume after a range forms Because the market needs to digest the prior move before finding conviction for the next one Because volume always increases sharply during ranges Because ranges only occur on weekends
13. What is a key risk of trading directly inside a tight consolidation range?
There is no risk since ranges always break in the same direction Whipsaw losses, since price chops between the range boundaries without clear direction Guaranteed profits from every bounce Ranges cannot be identified on any chart type
14. What is the main limitation of a simple line chart compared to a candlestick chart?
It shows too much detail and becomes cluttered It only plots one price point per period, losing information about the open, high, and low It cannot be used on any timeframe It always displays volume incorrectly
15. What distinguishes a Renko chart from a standard candlestick chart?
Renko charts plot a new brick based on time intervals just like candlesticks Renko charts remove time entirely and plot a new brick only after a fixed price move Renko charts show more decision-making detail than candlesticks Renko charts are identical to Heikin Ashi charts
16. What trade-off comes with using a Heikin Ashi chart instead of a standard candlestick chart?
Heikin Ashi candles show the exact real open, high, low, and close of each period Heikin Ashi smooths price for a cleaner trend view but no longer reflects the market's true OHLC data Heikin Ashi charts cannot be used to judge trend direction at all Heikin Ashi charts always use more time on the x-axis than candlestick charts