Sample Questions

for CMT
Level 1
Booklet B

C M T L e v e l 1 S a m p l e Q u e s t i o n s

Copyright2011MarketTechniciansAssociation,Inc.Allrightsarereserved.
These sample questions are used to provide the candidate with examples of how the
questions may appear on the CMT exam. The actual CMT exam does not have any true/false
questions.ThesesamplequestionscovermuchofthemateriallistedintheBodyofKnowledge,
while the actual exam questions may be more difficult. In addition, these sample questions
cover a variety of topics; however, the actual exam weighting may vary. The actual exam
consistsof132questionsofwhich120arescoreditems.
Pleasenotethatthissamplequestionbookletwaspreparedentirelyseparatelyfromthe
actualexamtoensurethesecurityoftheactualexamquestions.Insomeaspects,thesesample
questions are designed differently from the actual exam so as to better serve as a review for
candidates.Forexample,manyquestionsand/oranswersmaybelongerthanintheactualexam
sothatthequestionsandanswersserveasareviewofthematerial.
TheMTAmaintainsadiscussiongroupforumforCMTcandidatesonitswebsite.
CandidatesareencouragedtoutilizethisresourceandtodiscussanyareasoftheBodyof
Knowledgewithwhichtheyarenotfamiliar.
Thisbookofpracticeexamsisproducedby:
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Allmaterialisbelievedtobereliableattimeofpublication,butnotguaranteed.The
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omissions.

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CMTLevel1SampleQuestionsAnswerSheet

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C M T L e v e l 1 S a m p l e Q u e s t i o n s

Copyright2011MarketTechniciansAssociation,Inc.Allrightsarereserved.
CMTLevel1SampleQuestions
1. Movingaveragecrossoverscanbeusedtoindicate:
a. Buyandsellsignals
b. Positiverelativestrength
c. Negativevolume
d. Trenddivergence

2. Whichofthefollowingcanbeconsideredasentimentindicator:
a. SpecialistShortSalesRatio
b. MutualFundCash/AssetRatio
c. OddLotPurchase/SalesRatio
d. Alloftheabove

3. Speedresistancelines:
a. Divideatrendinthirds
b. Measuretherateofascentordescentofatrend
c. Areusedtomeasurepercentageretracements
d. Alloftheabove

4. Anexhaustiongapisobserved:
a. Inthebeginningstageofabearmarket
b. Afterpriceshavemovedsidewaysforanextendedperiodoftime
c. Neartheendofamajorpricemove
d. Withlighttradingvolume

5. Onadailybarchart:
a. Eachdayspriceactionisrepresentedbyaverticalbar;thedailyhigh,lowandcloseareplotted
b. Pricesareplottedvertically,timehorizontally
c. Thepricescalemaybeeitherarithmeticorlogarithmic
d. Alloftheabove

6. Anappropriatetimeintervalselectionforabarchartwhichisdesignedtoshowverylongtermtrends
wouldbe:
a. Daily
b. Weekly
c. Monthly
d. Annually

7. Onabarchart,volumeisNORMALLYshown:
a. Totherightofthepricetimeseries
b. Underthepricetimeseries
c. Abovethepricetimeseries
d. Totheleftofthepricetimeseries

8. APointandFigurechartDIFFERSfromabarchartas:
a. Anewplotonapointandfigurechartismadeonlywhenthepricechangesbyagivenamount
b. Timeintervalsareclearlyshowninapointandfigurechart
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c. Pointandfigurechartsareonlyconcernedwithmeasuringpricemomentum
d. Anewplotonabarchartismadeonlywhenthepricechangesbyagivenamount

9. PointandFigurechartsdisplay:
a. Dailyhighlowclose
b. Dailyclosereversals
c. Sequentialreversalsofpriceinunitincrements
d. Dailypriceandvolumedata

10. InconstructingaPointandFigurechart,anewboxisaddedONLYwhen:
a. Thepricehasmovedbylessthanthespecifiedboxsize
b. Thepricehasmovedbyequaltoormorethanthespecifiedboxsize
c. Thevolumeconfirmsthepricemovement
d. Thepricehasmovedtoanewhigh

11. AsthepriceunitofareversalonaPointandFigurechartisdecreased:
a. Timeanalysisbecomesmorecriticalforinterpretation
b. Thedetailofpricemovementgraphicallydisplayedisdecreased
c. Thedetailofpricemovementgraphicallydisplayedisincreased
d. Thepossibilityofwhipsawsdecreases

12. Whichcharttypeismorecommonlyusedfordisplayingrelativestrengthbetweenastockandthe
market?
a. Linechart
b. Barchart
c. PointandFigurechart
d. Reversalchart

13. Thebodyofthecandlesticklinedisplaystherelationshipbetween:
a. Thecurrentsessionshighandlow
b. Thecurrentsessionscloseandthepriorsessionsclose
c. Thecurrentsessionsopenandhigh
d. Thecurrentsessionsopenandclose

14. Ablackrealbodyincandlechartingmeansthat:
a. Thecloseishigherthantheopen
b. Thecloseislowerthantheopen
c. Theopenishigherthanthelow
d. Thecurrentsessionscloseislowerthanthepriorsessionsclose

15. WhichWesterntechnicaltoolscanbeusedoncandlecharts:
a. Trendlines
b. Movingaverages
c. Fibonacciretracements
d. Alloftheabove

16. Atrendlineishelpfulindetermining:
a. Overboughtoroversoldmarketconditions
C M T L e v e l 1 S a m p l e Q u e s t i o n s

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b. Whenapricereversalhastakenplace
c. Thecyclicalintervalbetweenbullandbearmarkets
d. Aprobablepricetargetfortheextentofthepricemove

17. Thebasicconceptbehindtheuseofatrendlineisthat:
a. Priceandvolumetendtoconfirmeachother
b. Pricesriseandfallincyclicalpatterns
c. Pricesfollowanaturalrhythm
d. Atrendinmotionwillremaininmotionuntilitreverses

18. TechnicalanalystsGENERALLYbelieve:
a. Thattrendlineanalysiscannotbeappliedtopointandfigurecharts
b. Apriceclosebeyondthetrendlineismoresignificantthananintradaypenetration
c. Trendlinesareusefulforvalidationofpricegaps
d. Pricewhipsawscanbeavoidedusingtrendlines

19. Ingeneral,markettechniciansbelieve:
a. Thattrendlineanalysiscanbeusedinconjunctionwithvolumetopredictmoneyflows
b. Thatthemoretimesatrendlinehasbeensuccessfullytested,thegreaterthesignificanceofits
violation
c. Trendlinesarenothelpfulingaugingsupportandresistancepoints
d. Trendlinesareanartformwhichdonotlendthemselvestocomputerconstruction

20. Inaheadandshoulderspattern,volumeUSUALLY:
a. Isgreatestinthemiddleleg
b. Increaseswitheachsuccessivepeak
c. Decreaseswitheachsuccessivepeak
d. Isconstantthroughoutthepattern

21. Thecharacteristicsofacycleare:
a. Length,widthandbreadth
b. Price,volumeandflow
c. Amplitude,breadthandwidth
d. Amplitude,periodandphase

22. Amovingaverage:
a. Isaleadingpriceindicator
b. Amplifiesthedata
c. Smoothesoutdatafluctuations
d. Isnotappropriateforuseonbarcharts

23. MovingaveragesareMOSToftenusedtosignal:
a. Areversalinpricetrend
b. Pricecycles
c. Volumeconfirmation
d. Pricetargets
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24. Asimplemovingaverageisoftencriticizedbecause:
a. Themostrecenteventsaregivenextraweight
b. Theentirepricetimeseriesisusedinitscalculation
c. Equalweightisgiventoeachpointincludedinthecalculation
d. Itisdifficulttocalculate

25. Anexponentiallysmoothedmovingaverage:
a. Excludesolderpricepointsinthecalculation
b. Givesmoreweighttomorerecentobservations
c. Cannotbeplottedonabarchart
d. Noneoftheabove

26. AsellsignalisNORMALLYgivenwhen:
a. Ashorterlengthmovingaveragecrossesalongerlengthmovingaveragefromabove
b. Alongerlengthmovingaveragecrossesashorterlengthmovingaveragefromabove
c. Ashorterlengthmovingaverageremainsabovealongerlengthmovingaverage
d. Alongerlengthmovingaverageremainsaboveashorterlengthmovingaverage

27. Oscillatorsareusedtoalerttheanalystto:
a. Volumedivergences
b. Continuationpatterns
c. Extendedrallies
d. Overboughtoroversoldpriceconditions

28. AllthefollowingaremomentumoscillatorsEXCEPT:
a. Advance/declineline
b. RelativeStrengthIndex(RSI)
c. Stochastic
d. MovingAverageConvergence/Divergence(MACD)

29. MOSToscillatorsareconstructed:
a. Sothatthemidpointgoesthroughzero
b. Onasemilogarithmicscaletohighlightmomentum
c. Sothatallpointsarepositiveinvalue
d. Withoutanupperboundary

30. OscillatorsareMOSThelpfultogaugepricebehaviorin:
a. Sharplyrisingmarkets
b. Sharplyfallingmarkets
c. Sharplyrisingandsharplyfallingmarkets
d. Nontrendingmarketswherepricesfluctuateinawelldefinedtradingrange

C M T L e v e l 1 S a m p l e Q u e s t i o n s

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31. OscillatorsareMOSTvaluablewhen:
a. Theyareconfirmedbyrelativestrengthmeasures
b. Theyareacceleratingintrend
c. Theirvaluereachesanextremereadingneartheupperorlowerendoftheirboundaries
d. Evaluatedusingmultiplemovingaverages

32. Usinganoscillator,oneMOSToftenobserves:
a. Apeakinmomentuminabullmarketbeforeapeakinthepricetrend
b. Anaccelerationinpricemomentumpriortoamajormarketbottom
c. Constantpricemomentumthroughoutapricerallyextendingforatleastoneyear
d. Significantchangeinpricemomentumthroughoutatypicalfouryearcycle

33. Atypicalmomentumindexisconstructedby:
a. Plottingthechangeinpricebetweenthebeginningandendofatimeinterval
b. Plottingthedifferenceinvolumebetweenthedailyhighpriceandthedailylowprice
c. Plottingcumulativepricebetweentwopoints
d. Connectingtheboxesonapointandfigurechart

34. Ingaugingtheimportanceofapotentialsupportorresistancelevel,theanalystmustconsider:
a. Theamountoftimethathaselapsedbetweentheformationoftheoriginalcongestionandthe
natureofgeneralmarketdevelopmentsinthemeantime
b. Thevolumeofstockthathastradedinthesupportorresistancezone
c. Thespeedandextentofthepreviouspricemove
d. Alloftheabove

35. Violatedsupportlevelstypically:
a. Becomesupportlevelsaspricesfalllower
b. Areassociatedwithdecliningpriceprojections
c. Becomeresistancelevelsonpricebounces
d. Indicateanimminentpricereversal

36. Aswithtrendlines,speedresistancelines:
a. Canbeusedinconjunctionwithsentimentindicators
b. Indicatethepotentialforimmediatepricereversals
c. Mustbeconfirmedwithvolume
d. Reverserolesoncetheyarebroken

37. TheMINIMUMdownsideprojectionfromaheadandshoulderstoppatternisderived:
a. Byestimatingthelengthoftheprimarypricecycle
b. Bymeasuringthedistancefromthepenetrationofthenecklinebytheleftshouldertothe
penetrationofthenecklinebytherightshoulderandextendingdownfromthepointof
penetrationoftherightshoulder
c. Bymeasuringthewidthoftheleftshoulderandsubtractingthatdistancefromtheneckline
d. Byprojectingdownwardfromthenecklinetheverticaldistancefromthetopoftheheadtothe
neckline

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38. Amovingaveragecrossoversystemisanacceptedmethodofgeneratingbuyandsellsignals.An
oscillatorcanbecreatedfromsuchasystemthatutilizesanhistogramtomeasurethedistance
betweenthetwomovingaverages.WhichofthefollowingwouldNOTbeanapplicationofsuchan
oscillator?
a. Identifyingareasofaccumulationanddistribution
b. Identifyingdivergences
c. Identifyingshorttermvariationsfromthelongtermtrendwhentheshorteraveragemovestoo
farabovethelongeraverage
d. Identifypointswherethetwomovingaveragescross

39. WhichofthefollowingoscillatorsisconsideredtobeofMOSTuseinanalyzingtrendingmarkets?
a. Stochastic
b. RSI
c. MACD
d. Noneareespeciallyusefulintrendingmarkets

40. Arisingrelativestrengthlineforastockinafallingmarketindicates:
a. Thatpriceandvolumearediverging
b. Thatthestockisperformingworsethanthemarket
c. Thatthestockisperformingbetterthanthemarket
d. Thatthestockspriceisrisingdespitethefallingmarket

41. WhichsetofindicatorswouldbeMOSThelpfulinanalyzingtradingrangemarkets?
a. Movingaverages
b. Oscillators
c. Cycles
d. ElliottWave

42. Ifoneisstudyingacycleof8weekstheassumptionisthatthenextlongestcycle:
a. 10weeks
b. 12weeks
c. 16weeks
d. 24weeks

43. TheDeadCatBounceUSUALLYoccurs:
a. Atmarketbottoms
b. Atmarkettops
c. Duringapauseintrend
d. Onceaweek

44. Thefouryearcycle,alsoknownasthePresidentialcycle,realizesBESTreturnsinthestockmarketto
be:
a. Electionandpreelection
b. Midtermandelection
c. Preelectionandpostelection
d. Postelectionandmidterm
C M T L e v e l 1 S a m p l e Q u e s t i o n s

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45. Theideathatallpricemovementistheadditionofallactivecyclesisthebasisfortheprincipleof:
a. Synchronicity
b. Summation
c. Proportionality
d. Harmonicity

46. Whichofthefollowingindicatorsisusedtomeasuremarketbreadth?
a. Cumulativebreadthline
b. Advance/Declineratio
c. McClellanoscillator
d. Alloftheabove

Thefollowingthreequestionsrefertorelativestrengthanalysisasappliedtoequitytechnicalanalysis(not
WellesWilderRSI)

47. RelativestrengthisUSUALLYcalculatedby:
a. Determiningthemoneyflowsoftwosecurities
b. Dividingthepriceofasecuritybythepriceofanothersecurity,indexorsubgroup
c. Dividingasecurityspricebyitstradingvolume
d. Calculatingthe14daypricechangeofthesecurity

48. Risingrelativestrengthindicates:
a. Lackofinvestorconviction
b. Thesecurityisperformingbetterthanthemarketortheentitybeingcompared
c. Themarketisperformingbetterthanthesecurity
d. Positivepricemomentum

49. Relativestrengthanalysisisusefulinidentifying:
a. Decliningvolumetrends
b. Reversalinpricemomentum
c. Significantpricegaps
d. Industrygrouprotation

50. Tospotweaknessinanuptrend,volumeshouldbe:
a. Rising
b. Falling
c. Greaterthantheaveragevolume
d. aandc

51. WhichofthefollowingisNOTanunderlyingassumptionoftechnicalanalysis?
a. Pricesmoveintrends
b. Pricediscountseverything
c. Theconsensusisalwayswrong
d. Supplyanddemanddeterminesprice

52. WhenBollingerBandscontract(getclosertogether)itUSUALLYmeans:
a. Astockisreadytorally
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b. Astockisreadytodecline
c. Volatilityhasincreased
d. Volatilityhasdecreased

53. PointandFigurechartsareMOSTusefulinidentifying:
a. Trends
b. Areasofaccumulationanddistribution
c. Reversalpoints
d. Areasofsupportandresistance

54. WhichofthefollowingwouldNOTbeconsideredameansofidentifyingatrend?
a. Regressionlines
b. Trendlines
c. Relativestrengthlines
d. Movingaverages

55. WhichofthefollowingdoesNOTdescribestandarddeviationlines:
a. Twostandarddeviationsrepresentsabout95%ofthetradingrange
b. Consistsoftwovariables,startingpointandslope
c. Thecenterlineisabestfitline
d. Abuyisgeneratedwhenpricecrossesthe1standarddeviationlinefromabove

56. Candlestickchartscanbeusedtoidentify:
a. Pricepatterns
b. Trendreversals
c. Pausesintrends
d. Alloftheabove

57. WhichofthefollowingwouldNOTbeconsideredanimportantfactorindeterminingthesignificanceof
atrendline?
a. Duration
b. Distancefromprice
c. Numberoftimestouched
d. Angleofascentordescent

58. Whichmovingaveragegivesequalweighttoeachdaysprice?
a. Exponential
b. Weighted
c. Simple
d. aandc

59. WhichistheLEASTsignificantpenetrationofarisingtrendline?
a. A1%penetrationabovethetrendline
b. Acloseabovethetrendline
c. Twosuccessiveintradaypenetrationsoftrendline
d. Alltheaboveareequallysignificant
C M T L e v e l 1 S a m p l e Q u e s t i o n s

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60. Whichareconsideredimportantindeterminingthevalidityofatrendlinebreak?
a. Time
b. Price
c. Volume
d. Alltheabove

61. Movingaveragestendtochangedirectionwellafterapeakortroughinpriceandthereforeare
consideredlateinchangingdirection.WhichofthefollowingisgenerallyconsideredtheMOST
effectivewaytooffsetthistendencytolag?
a. Usingaweightedmovingaverage
b. Usinganunweightedmovingaverage
c. Usingmovingaveragecrossovers
d. Noneoftheabove

62. WhichofthefollowingwouldNOTbeconsideredasupportlevel?
a. Previoushigh
b. Previouslow
c. Tradingrange
d. Alltheaboveareconsideredaspotentialsupportlevels

63. Whatismeantbythestatementvolumeprecedesprice?
a. Buyingpressureusuallyprecedessellingpressure
b. Sellingpressureisgreaterthanbuyingpressure
c. Priceislessimportantthanvolume
d. Changesinsupplyanddemandareoftenapparentinvolumebeforeprice

64. AcompleteElliottwaveismadeupof:
a. Fivemotiveimpulsewaves
b. Threecorrectivewaves
c. Anextended3rdwave
d. aandb

65. Adescendingtrianglethatformsinadowntrendwouldprobablybeconsidereda:
a. Reversalpattern
b. Continuationpattern
c. Eitheraorb
d. Probablywouldntbeusefulinforecastingthefuturedirectionofthetrend

66. WhichofthefollowingisLEASTreliable?
a. Broadeningformations
b. Wedges
c. Triangles
d. Pennants

67. WhichofthefollowingisNOTtrueaboutvolume?
a. Arallythatdevelopsondecliningvolumeissuspect
b. Arallythatoccursonrisingvolumepointstoaprobabletrendreversal
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c. Bothpriceandvolumecanfalloffsharplyafterabuyingclimax
d. Adownsidebreakofamovingaverageortrendlineshouldoccuronheavyvolumetoqualifyas
abearishsignal

68. WhichofthefollowingisLEASTtrueofadojipattern?
a. Itrepresentsindecision
b. Itisusuallyacontinuationpattern
c. Itisusuallyareversalpattern
d. Theopeningandclosingpricesareatidenticallevels

69. WhichofthefollowingisNOTtrueaboutgaps?
a. Commongapsareoflittleornoforecastingvalue
b. Breakawaygapsusuallyoccuronheavyvolume
c. Gapsarealmostalwaysfilled
d. Whenexhaustiongapsarefilleditisoftenthesignofatrendreversal

70. WhichofthefollowingwouldMOSTlikelybeacontinuationpattern?
a. Engulfingpattern
b. Headandshoulders
c. Doublebottom
d. Flag

71. Riskcanbedefinedas:
a. Variabilityofreturns
b. Amountoflosspertrade
c. Beta
d. Alloftheabove

72. Ina10dayrateofchangeindicator,ifthelatest(morerecent)priceishigherthantheprice10days
ago:
a. Theratiowouldbebetween+1and1
b. Theratiowouldbepositive
c. Theratiowouldbenegative
d. Theratiowouldbeconstantuntilthemarketchangestrend

73. Anextremeoverboughtreadingonamomentumindicatorintheearlystagesofarally:
a. Showsthatthemarketisreadytocorrect
b. Indicatesthattherallyisstrongandwillprobablycarryfurther
c. Isaclearindicationthatthepaceoftherallyisabouttoslowdown
d. Isaclearindicationthatthepaceoftherallyisabouttoaccelerate

74. WhichstatementisTRUEofanuptrendingmarket?
a. Momentumindicatorswilltendtohitgreateroversoldextremes
b. Momentumindicatorswilltendtostayoverboughtlonger
c. Momentumindicatorswilltendtohitgreateroverboughtextremesthaninadowntrending
market
d. bandc

C M T L e v e l 1 S a m p l e Q u e s t i o n s

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75. WhichwouldnormallybeconsideredasentimentindicatorthatisMOSTusefultotraders?
a. Corporatebuybacks
b. Price/earningsratios
c. Insiderbuying
d. Put/callratios

76. WhichtypeofchartisUSUALLYconsideredBESTsuitedforestablishingpricetargetsbasedona
horizontalmeasurement?
a. Linecharts
b. Dailybarcharts
c. Pointandfigurecharts
d. Candlestickcharts

77. Contraryopinionisausefulinvestmenttoolbecause:
a. Thelittleguyisalwayswrong
b. Tradersareoftenmostbearishnearmarkettops
c. Institutionalinvestorshaveaccesstobetterinformation
d. Itisatturningpointswherepeoplearewrong

78. WhichofthefollowingisNOToneoftheessentialareasoftechnicalanalysis?
a. Businesscycleanalysis
b. Flowoffunds
c. Sentiment
d. Marketstructureindicators

79. Thelongesttermtrendinthemarketisthe:
a. Primary
b. Cyclical
c. Secular
d. Noneoftheabove

80. IntheDowTheory,theMOSTimportantpriceisthe:
a. Open
b. High
c. Low
d. Close

81. ThemostpopulartypesofmarketindexesincludeallthefollowingEXCEPT:
a. Logarithmicweighted
b. Capitalizationweighted
c. Unweighted
d. Priceweighted

82. TheMOSTcomprehensive(allinclusive)indexis:
a. ValueLineIndex
b. NYStockExchangeCompositeIndex
c. Standard&PoorsComposite500Index
d. Wilshire5000EquityIndex
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83. WhichistheMOSTimportantinidentifyingahead&shoulderstoppattern?
a. Theshouldersmustbeofequalheight
b. Volumeontherightshouldermustdecreasesubstantiallyfrompreviousrallies
c. Ahead&shoulderswithahorizontalnecklineismorereliable
d. Volumemustdecreaseonthesuccessiveralliesfromtherightshouldertoheadtoleftshoulder

84. ThelongesttermcycleisGENERALLYrecognizedasthe:
a. Juglarcycle
b. Kitchincycle
c. Decennialcycle
d. Kondratieffcycle

85. TheJanuaryEffectreferstoaseasonaltendencywhen:
a. Largecapitalizationstocksoutperformsmallcapitalizationstocks
b. Smallcapstocksoutperformlargecapstocks
c. Stocks,regardlessofsizeofmarketcaps,bouncebackfromyearendtaxselling
d. Secondaryindexesfrequentlyshowtheirlargestgainsfortheyear

86. WhichofthefollowingisNOTasentimentindicator?
a. Put/callratio
b. Consumerconfidenceindex
c. Brokeragefirmhiring
d. Relativestrength

ThefollowingquestionsfivequestionsapplytotheMTACodeofEthics:

87. AccordingtotheMTACodeofEthics,MembersandAffiliatesareheldtothesamestandardsof
conduct.
a. True
b. False

88. MembersandAffiliatesareallowedtousesubstantiallythesamelanguagefromareportpreparedby
anauthornowdeceasediftheoriginalauthorreceivesprominentandadequatecreditforthework.
a. True
b. False

89. AMemberoranAffiliatemustwaitatleastaweekbeforeactingonanyrecommendationmadebythe
MemberorAffiliate,inordertogiveboththeMembersorAffiliatesemployerandclientsadequate
timetoactonsuchrecommendationfirst.
a. True
b. False

90. MembersandAffiliatesarepermittedtousetheAssociationmailinglistforcommercialpurposes
providedtheyobtainpriorpermissionfromtheMTA.
a. True
b. False

C M T L e v e l 1 S a m p l e Q u e s t i o n s

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91. IfaMemberorAffiliatetakesajobwithanewemployer,heorsheisthenfreefromtheresponsibility
tokeepinconfidenceknowledgeconcerningthelawfulprivateaffairsofhisorherclients,former
employer,ortheclientsoftheformeremployer.
a. True
b. False

92. Asimplemovingaverageis______torespondtopricechangesthana________movingaverage.
a. Slower,weighted
b. Faster,exponential
c. Faster,geometric
d. Noneoftheabove

93. Onereasonwhypriceoscillatorsareusefulisbecause_____________________.
a. Momentumtendstoleadprice
b. Pricetendstoleadmomentum
c. Theygiveyouquickentryandexitpoints
d. Theyaretobeusedinisolationandareusefulinanymarket

94. Asecondarycyclecanbeusedtodeterminethemajortrendofthemarket.
a. True
b. False

95. ThetrendofeachcycleisMOSTstronglyinfluencedbythetrendofthenextlongestcycle.
a. True
b. False
96. DivergencesandfailureswingsareMOSTusefulonanRSIindicatorwhentheyoccurbelowthe
_______________line.
a. 70andabovethe30
b. 80andabovethe20
c. 60andabovethe40
d. 90andabovethe10

97. WhichofthefollowingdescribestheEquivolumecharting?
a. Itisatechniquewhichcomparesmarketperformanceondayswithequalvolume
b. Itisthesumoftwoexponentialmovingaverages
c. Itisabarchartwherethebarsvaryinwidthwhichisdeterminedbyvolume
d. ItisavariationoftheMcClellanOscillator

98. Whichofthefollowingdescribesonbalancevolume?
a. Ondayswhenpricesclosehigher,itisassumedthatallvolumeisrepresentedbybuyers
b. Itisabreadthmomentumoscillator
c. Itisatechniquewhichcomparesmarketperformanceondayswithequalvolume
d. Itrepresentsadvancingissuesasapercentoftotalissuestraded

99. WhichofthefollowingisNOTtrueofpointandfigurecharting?
a. Duetothecomplexityincreatingthesecharts,ithasonlycomeintocommonusagewiththe
adventofcomputers
b. Ithassimple,welldefinedtradingrules
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Copyright2011MarketTechniciansAssociation,Inc.Allrightsarereserved.
c. Iteliminatespricereversalsbelowaminimumvalue
d. Ithasnotimefactor

100. Whatistherelevanceoftheboxsizeinpointandfigurecharting?
a. Boxsizerepresentsvolumetradedataparticularpricelevel
b. Boxsizeistheamountthepricemustchangebeforeanewcolumniscreated
c. Boxsizedeterminesthesensitivityoffrequencyoftrading
d. Boxsizeutilizedshouldbeconsistentforallsecuritiesbeinganalyzed

101. Whatisthedefinitionofopeninterestinthefuturesmarkets?
a. Thesumoflongandshortcontracts
b. Thetotalnumberofoutstandinglongorshortcontracts
c. Thedifferencebetweenlongandshortcontracts
d. Thevolumetradedsinceinceptionofthecontract

102. Whichofthefollowingisadifferencebetweenpointandfigurechartsandbarcharts?
a. Pointandfigurechartsmoreaccuratelyportraytime
b. Barchartsprovideclearertradingsignals
c. Pointandfigurechartsprovideclearertradingsignals
d. Alloftheabove

103. Whichofthefollowingistrueofthecomparisonofcandlestickchartstobarcharts?
a. Candlestickchartsarebasedonmoredata
b. Candlestickchartsexhibitdifferenttrendpatterns
c. Candlestickchartsproducedifferentsupportandresistancelevels
d. Candlestickchartsallowforeasiervisualinterpretation

104. Incandlestickcharts,whatisconsideredtheessenceofthepricemovement?
a. Pricetrend
b. Wick
c. Realbody
d. Shadow

105. Whatadditionalinterpretationispossiblewithcandlestickchartscomparedtobarcharts?
a. Trends
b. Closingprices
c. Relativestrengthbetweenbullsandbears
d. Supportlevels

C M T L e v e l 1 S a m p l e Q u e s t i o n s

Copyright2011MarketTechniciansAssociation,Inc.Allrightsarereserved.
CMTLevel1SampleQuestionsAnswerSheet

1. Movingaveragecrossoverscanbeusedtoindicate:
a.Buyandsellsignals

2. Whichofthefollowingcanbeconsideredasentimentindicator:
d.Alloftheabove

3. Speedresistancelines:
d.Alloftheabove

4. Anexhaustiongapisobserved:
c.Neartheendofamajorpricemove

5. Onadailybarchart:
d.Alloftheabove

6. Anappropriatetimeintervalselectionforabarchartwhichisdesignedtoshowverylongtermtrends
wouldbe:
c.Monthly

7. Onabarchart,volumeisNORMALLYshown:
b.Underthepricetimeseries

8. APointandFigurechartDIFFERSfromabarchartas:
a.Anewplotonapointandfigurechartismadeonlywhenthepricechangesbyagivenamount

9. PointandFigurechartsdisplay:
c.Sequentialreversalsofpriceinunitincrements

10. InconstructingaPointandFigurechart,anewboxisaddedONLYwhen:
b.Thepricehasmovedbyequaltoormorethanthespecifiedboxsize

11. AsthepriceunitofareversalonaPointandFigurechartisdecreased:
c.Thedetailofpricemovementgraphicallydisplayedisincreased

12. Whichcharttypeismorecommonlyusedfordisplayingrelativestrengthbetweenastockandthe
market?
a.Alinechart

13. Thebodyofthecandlesticklinedisplaystherelationshipbetween:
d.Thecurrentsessionsopenandclose

14. Ablackrealbodyincandlechartingmeansthat:
b.Thecloseislowerthantheopen

15. WhichWesterntechnicaltoolscanbeusedoncandlecharts?
d.Alloftheabove
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Copyright2011MarketTechniciansAssociation,Inc.Allrightsarereserved.

16. Atrendlineishelpfulindetermining:
b.Whenapricereversalhastakenplace

17. Thebasicconceptbehindtheuseofatrendlineisthat:
d.Atrendinmotionwillremaininmotionuntilitreverses

18. TechnicalanalystsGENERALLYbelieve:
b.Apriceclosebeyondthetrendlineismoresignificantthananintradaypenetration

19. Ingeneral,markettechniciansbelieve:
b.Thatthemoretimesatrendlinehasbeentested,thegreaterthesignificanceofitsviolation

20. Inaheadandshoulderspattern,volumeUSUALLY:
c.Decreaseswitheachsuccessivepeak

21. Thecharacteristicsofacycleare:
d.Amplitude,periodandphase

22. Amovingaverage:
c.Smoothesoutdatafluctuations

23. MovingaveragesareMOSToftenusedtosignal:
a.Areversalinpricetrend

24. Asimplemovingaverageisoftencriticizedbecause:
c.Equalweightisgiventoeachpointincludedinthecalculation

25. Anexponentiallysmoothedmovingaverage:
b.Givesmoreweighttomorerecentobservations

26. AsellsignalisNORMALLYgivenwhen:
a.Ashorterlengthmovingaveragecrossesalongerlengthmovingaveragefromabove

27. Oscillatorsareusedtoalerttheanalystto:
d.Overboughtoroversoldpriceconditions

28. AllthefollowingaremomentumoscillatorsEXCEPT:
a.Advance/declineline

29. MOSToscillatorsareconstructed:
a.Sothatthemidpointgoesthroughzero

30. OscillatorsareMOSThelpfultogaugepricebehaviorin:
d.Nontrendingmarketswherepricesfluctuateinawelldefinedtradingrange

31. OscillatorsareMOSTvaluablewhen:
c.Theirvaluereachesanextremereadingneartheupperorlowerendoftheirboundaries
C M T L e v e l 1 S a m p l e Q u e s t i o n s

Copyright2011MarketTechniciansAssociation,Inc.Allrightsarereserved.

32. Usinganoscillator,oneMOSToftenobserves:
a.Apeakinmomentuminabullmarketbeforeapeakinthepricetrend

33. Atypicalmomentumindexisconstructedby:
a.Plottingthechangeinpricebetweenthebeginningandendoftimeinterval

34. Ingaugingtheimportanceofapotentialsupportorresistancelevel,theanalystMUSTconsider:
d.Alloftheabove

35. Violatedsupportlevelstypically:
c.Becomeresistancelevelsonpricebounces

36. Aswithtrendlines,speedresistancelines:
d.Reverserolesoncetheyarebroken

37. TheMINIMUMdownsideprojectionfromaheadandshoulderstoppatternisderived:
d.Byprojectingdownwardfromthenecklinetheverticaldistancefromthetopoftheheadtothe
neckline

38. Amovingaveragecrossoversystemisanacceptedmethodofgeneratingbuyandsellsignals.An
oscillatorcanbecreatedfromsuchasystemthatutilizesanhistogramtomeasurethedistance
betweenthetwomovingaverages.WhichofthefollowingwouldNOTbeanapplicationofsuchan
oscillator?
a.Identifyingareasofaccumulationanddistribution

39. WhichofthefollowingoscillatorsisconsideredtobeofMOSTuseinanalyzingtrendingmarkets?
c.MACD

40. Arisingrelativestrengthlineforastockinafallingmarketindicates
c.Thatthestockisperformingbetterthanthemarket

41. WhichsetofindicatorswouldbeMOSThelpfulinanalyzingtradingrangemarkets?
b.Oscillators

42. Ifoneisstudyingacycleof8weeks,theassumptionisthatthenextlongestcyclewouldbe:
c.16weeks

43. TheDeadCatBounceUSUALLYoccurs:
a.Atmarketbottoms

44. Thefouryearcycle,alsoknownasthePresidentialcycle,realizesBESTreturnsinthestockmarketto
be:
a.Electionandpreelection

45. Theideathatallpricemovementistheadditionofallactivecyclesisthebasisfortheprincipleof:
b.Summation

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Copyright2011MarketTechniciansAssociation,Inc.Allrightsarereserved.
46. Whichofthefollowingindicatorsisusedtomeasuremarketbreadth?
d.Alloftheabove

47. RelativestrengthisUSUALLYcalculatedby:
b.Dividingthepriceofasecuritybythepriceofanothersecurity,indexorsubgroup

48. Risingrelativestrengthindicates:
b.Thesecurityisperformingbetterthanthemarketortheentitybeingcompared

49. Relativestrengthanalysisisusefulinidentifying:
d.Industrygrouprotation

50. Tospotweaknessinanuptrend,volumeshouldbe:
b.Falling

51. WhichofthefollowingisNOTanunderlyingassumptionoftechnicalanalysis?
c.Theconsensusisalwayswrong

52. WhenBollingerBandscontract(getclosertogether)itUSUALLYmeans:
d.Volatilityhasdecreased

53. PointandFigurechartsareMOSTusefulinidentifying:
d.Areasofsupportandresistance

54. WhichofthefollowingwouldNOTbeconsideredameansofidentifyingatrend?
c.Relativestrengthlines

55. WhichofthefollowingdoesNOTdescribestandarddeviationlines:
d.Abuyisgeneratedwhenpricecrossesthe1standarddeviationlinefromabove

56. Candlestickchartscanbeusedtoidentify:
d.Alloftheabove

57. WhichofthefollowingwouldNOTbeconsideredanimportantfactorindeterminingthesignificanceof
atrendline?
b.Distancefromprice

58. Whichmovingaveragegivesequalweighttoeachdaysprice?
c.Simple

59. WhichistheLEASTsignificantpenetrationofarisingtrendline?
c.Twosuccessiveintradaypenetrationsoftrendline

60. Whichareconsideredimportantindeterminingthevalidityofatrendlinebreak?
d.Alltheabove

61. Movingaveragestendtochangedirectionwellafterapeakortroughinpriceandthereforeare
consideredlateinchangingdirection.WhichofthefollowingisGENERALLYconsideredthemost
C M T L e v e l 1 S a m p l e Q u e s t i o n s

Copyright2011MarketTechniciansAssociation,Inc.Allrightsarereserved.
effectivewaytooffsetthistendencytolag?
a.Usingaweightedmovingaverage

62. WhichofthefollowingwouldNOTbeconsideredasupportlevel?
d.Alltheaboveareconsideredaspotentialsupportlevels

63. Whatismeantbythestatementvolumeprecedesprice?
d.Changesinsupplyanddemandareoftenapparentinvolumebeforeprice

64. AcompleteElliottwaveismadeupof:
d.aandb

65. Adescendingtrianglethatformsinadowntrendwouldprobablybeconsidereda:
b.Continuationpattern

66. WhichofthefollowingisLEASTreliable?
a.Broadeningformations

67. WhichofthefollowingisNOTTRUEaboutvolume?
b.Arallythatoccursonrisingvolumepointstoaprobabletrendreversal

68. WhichofthefollowingisLEASTTRUEofadojipattern?
b.Itisusuallyacontinuationpattern

69. WhichofthefollowingisNOTTRUEaboutgaps?
c.Gapsarealmostalwaysfilled

70. WhichofthefollowingwouldMOSTlikelybeacontinuationpattern?
d.Flag

71. Riskcanbedefinedas:
d.Alloftheabove

72. Ina10dayrateofchangeindicator,ifthelatest(morerecent)priceishigherthantheprice10days
ago:
b.Theratiowouldbepositive

73. Anextremeoverboughtreadingonamomentumindicatorintheearlystagesofarally:
b.Indicatesthattherallyisstrongandwillprobablycarryfurther

74. WhichstatementisTRUEofanuptrendingmarket?
d.bandc

75. WhichwouldnormallybeconsideredasentimentindicatorthatisMOSTusefultotraders?
d.Put/callratios

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Copyright2011MarketTechniciansAssociation,Inc.Allrightsarereserved.
76. WhichtypeofchartisUSUALLYconsideredBESTsuitedforestablishingpricetargetsbasedona
horizontalmeasurement?
c.PointandFigurecharts

77. Contraryopinionisausefulinvestmenttoolbecause
d.Itisatturningpointswherepeoplearewrong

78. WhichofthefollowingisNOToneoftheessentialareasoftechnicalanalysis?
a.Businesscycleanalysis

79. Thelongesttermtrendinthemarketisthe:
c.Secular

80. IntheDowTheory,theMOSTimportantpriceisthe:
d.Close

81. TheMOSTpopulartypesofmarketindexesincludeallthefollowingEXCEPT:
a.Logarithmicweighted

82. TheMOSTcomprehensive(allinclusive)indexis:
d.Wilshire5000EquityIndex

83. WhichistheMOSTimportantinidentifyingahead&shoulderstoppattern?
b.Volumeontherightshouldermustdecreasesubstantiallyfrompreviousrallies

84. ThelongesttermcycleisGENERALLYrecognizedasthe:
d.Kondratieffcycle

85. TheJanuaryEffectreferstoaseasonaltendencywhen:
b.Smallcapstocksoutperformlargecapstocks

86. WhichofthefollowingisNOTasentimentindicator?
d.Relativestrength

87. AccordingtotheMTACodeofEthics,MembersandAffiliatesareheldtothesamestandardsof
conduct.
a.True

88. MembersandAffiliatesareallowedtousesubstantiallythesamelanguagefromareportpreparedby
anauthornowdeceasediftheoriginalauthorreceivesprominentandadequatecreditforthework.
a.True

89. AMemberoranAffiliateMUSTwaitatleastaweekbeforeactingonanyrecommendationmadeby
theMemberorAffiliate,inordertogiveboththeMembersorAffiliatesemployerandclientsadequate
timetoactonsuchrecommendationfirst.
b.False

C M T L e v e l 1 S a m p l e Q u e s t i o n s

Copyright2011MarketTechniciansAssociation,Inc.Allrightsarereserved.
90. MembersandAffiliatesarepermittedtousetheAssociationmailinglistforcommercialpurposes
providedtheyobtainpriorpermissionfromtheMTA.
b.False

91. IfaMemberorAffiliatetakesajobwithanewemployer,heorsheisthenfreefromtheresponsibility
tokeepinconfidenceknowledgeconcerningthelawfulprivateaffairsofhisorherclients,former
employer,ortheclientsoftheformeremployer.
b.False

92. Asimplemovingaverageisslowertorespondtopricechangesthanaweightedmovingaverage.
a.Slower,weighted

93. Onereasonwhypriceoscillatorsareusefulisbecausemomentumtendstoleadprice.
a.Momentumtendstoleadprice

94. Asecondarycyclecanbeusedtodeterminethemajortrendofthemarket.
b.False

95. ThetrendofeachcycleisMOSTstronglyinfluencedbythetrendofthenextlongestcycle.
a.True

96. DivergencesandfailureswingsareMOSTusefulonanRSIindicatorwhentheyoccurbelowthe
_____________line.
b.70andabovethe30

97. WhichofthefollowingdescribestheEquivolumecharting?
c.Itisabarchartwherethebarsvaryinwidthwhichisdeterminedbyvolume

98. Whichofthefollowingdescribesonbalancevolume?
a.Ondayswhenpricesclosehigher,itisassumedthatallvolumeisrepresentedbybuyers

99. WhichofthefollowingisNOTtrueofpointandfigurecharting?
a.Duetothecomplexityincreatingthesecharts,ithasonlycomeintocommonusagewiththeadventof
computer

100. Whatistherelevanceoftheboxsizeinpointandfigurecharting?
c.Boxsizedeterminesthesensitivityoffrequencyoftrading

101. Whatisthedefinitionofopeninterestinthefuturesmarkets?
b.Thetotalnumberofoutstandinglongorshortcontracts

102. Whichofthefollowingisadifferencebetweenpointandfigurechartsandbarcharts?
c.Pointandfigurechartsprovideclearertradingsignals

103. Whichofthefollowingistrueofthecomparisonofcandlestickchartstobarcharts?
d.Candlestickchartsallowforeasiervisualinterpretation

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Copyright2011MarketTechniciansAssociation,Inc.Allrightsarereserved.
104. Incandlestickcharts,whatisconsideredtheessenceofthepricemovement?
c.Realbody

105. Whatadditionalinterpretationispossiblewithcandlestickchartscomparedtobarcharts?
c.Relativestrengthbetweenbullsandbears