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

15

MOMENTUM III: INDIVIDUAL INDICATORS

Answers

1. B.

2. C. Since you do not know which direction the price is likely to trend, it’s important to check out other indicators such as the +DI and –DI, so C is the correct answer.

3. A.

4. F.

5. C. Since each security has different levels of volatility, we do not know the significance of the 40 level unless we can look at past history. All we know is that directional movement has peaked, but we do not know the significance. Therefore, C is the correct answer.

6. B. The DI crossover is a momentum sell signal, and the head and shoulders is the price trend confirmation; therefore, based on this information, the correct thing to do is sell. Therefore, B is the correct answer.

7. C.

8. A.

9. Know Sure Thing ...