FOREX Technical Analysis Quiz! Trivia

The terms "Overbought," "Oversold," and "Moving average" are all commonly used in technical analysis and refer to specific market conditions or indicators. However, "Gremlin pattern" is not a recognized term in technical analysis and does not pertain to any commonly used concept or pattern. Therefore, "Gremlin pattern" is the odd term in this context.

The Ichimoku pattern is not an indicator for day trading. It is a complex charting system that provides information about support and resistance levels, trend direction, and momentum. It consists of multiple lines and components, making it more suitable for longer-term analysis rather than short-term day trading. In contrast, moving average, Bollinger bands, and moving average convergence and divergence are commonly used indicators in day trading to identify trends, volatility, and potential entry or exit points.

A bullish signal indicates that the price of a security is likely to increase. The MACD (Moving Average Convergence Divergence) is a technical indicator that measures the momentum of a security's price. When the MACD turns upward, it suggests that the bullish momentum is increasing, which is a bullish signal. Similarly, when the moving average trails the MACD line, it indicates that the bullish momentum is continuing, also a bullish signal. However, when the MACD turns downward, it suggests that the bullish momentum is decreasing or reversing, which is not a bullish signal. Therefore, the correct answer is that the MACD turns downward.

Moving average is used to identify trends in the market. It is a technical analysis tool that calculates the average price of a security over a specified period of time. By smoothing out price fluctuations, it helps traders and investors identify the direction of the market trend. When the price is above the moving average, it indicates an uptrend, while a price below the moving average suggests a downtrend. Therefore, moving average is an effective indicator for trend identification in the market.

Goichi Hosoda developed the Ichimoku trading system.

Bollinger bands measure volatility in the forex market. They consist of a middle band, which is a simple moving average, and two outer bands that are standard deviations away from the middle band. The width of the bands expands and contracts based on market volatility. When the bands widen, it indicates high volatility, and when they contract, it suggests low volatility. Traders use Bollinger bands to identify potential price breakouts, reversals, and overbought or oversold conditions in the market.

The Moving Average Convergence Divergence (MACD) indicator uses the 12-period exponential moving average. The MACD is a trend-following momentum indicator that calculates the difference between two exponential moving averages (EMA) of different periods, typically 12 and 26. The 12-period EMA is used to generate the MACD line, which is then plotted alongside a signal line (usually a 9-period EMA) to identify potential buy and sell signals. By using the 12-period EMA, the MACD aims to capture shorter-term price trends and provide insights into the strength and direction of the overall trend.

The Stochastic pattern uses %K and %D lines to signal our entry. The %K line is a measure of the current price relative to the highest and lowest prices over a specific period of time, while the %D line is a moving average of the %K line. When the %K line crosses above the %D line, it indicates a buy signal, suggesting that it is a good time to enter a trade. Therefore, the Stochastic pattern is the correct answer as it uses these lines to signal our entry.

Moving average convergence and divergence (MACD) is an indicator that shows the phase of the market. It is used to identify potential buy and sell signals by analyzing the relationship between two moving averages of an asset's price. When the MACD line crosses above the signal line, it indicates a bullish phase, suggesting that it may be a good time to buy. Conversely, when the MACD line crosses below the signal line, it indicates a bearish phase, suggesting that it may be a good time to sell. Therefore, MACD is a reliable indicator for determining the phase of the market.

The Kijun line is about the midpoint of signal lines. It is a component of the Ichimoku Kinko Hyo indicator, which is a popular technical analysis tool used in trading. The Kijun line is calculated by averaging the highest high and the lowest low over a specific period of time. It is used to identify potential support and resistance levels and to generate trading signals.