Study Guide for Technical Analysis Explained Fifth Edition, 5th Edition

1

THE DEFINITION AND INTERACTION OF TRENDS

Answers

1. Short, intermediate, and primary. Any order qualifies as a correct answer. The secular trend is an important trend, but is not widely followed.

2. A-B; B-C; C-D; and D-A

3. C. Investors need to know the direction of the long-term trend to correctly position themselves for the long-term. Since a short-term contratrend moves often result in weak price movements and numerous whipsaws, short-term traders also need to form an opinion on the direction of the primary trend. A well-known trading rule is always trade in the direction of the trend.

4. C. Peak-and-trough analysis is a basic tool of technical analysis and should never be underrated.

5. C.

6. A. The principles of technical analysis can ...