Technical Analysis & Chart Patterns Flashcards

In Elliott Wave Theory, a corrective 'zigzag' pattern is labeled as:

Answer: 5-3-5

A zigzag correction follows a 5-3-5 wave structure where the first and third legs are five-wave impulses and the middle is a three-wave correction.

The 'measured move' target for a double top pattern is calculated by:

Answer: Subtracting the pattern height from the neckline breakdown

The double top measured move projects downward from the neckline by the distance equal to the height from the tops to the neckline.

A stock gaps up at the open and continues higher throughout the session. This pattern is known as a:

Answer: Runaway (continuation) gap

A runaway gap occurs in the middle of a strong trend when price accelerates, confirming the trend has plenty of momentum remaining.

The Ichimoku Cloud component called 'Senkou Span B' is calculated using:

Answer: The midpoint of the highest high and lowest low over 52 periods

Senkou Span B is the midpoint of the 52-period high and low, forming the slower boundary of the Ichimoku Cloud.

Which of the following best describes a 'bearish harami' candlestick pattern?

Answer: A large bullish candle followed by a smaller bearish candle contained within its body

A bearish harami is a large bullish candle followed by a smaller bearish candle whose body fits entirely within the prior candle's body.

When a moving average acts as dynamic support or resistance, a trader should primarily watch for:

Answer: Price reactions (bounces or breaks) at the moving average level

Dynamic support/resistance from moving averages is confirmed by observing whether price bounces from or breaks through the average on each test.

In a strong uptrend, the Parabolic SAR dots would appear:

Answer: Below price, acting as a trailing stop floor

During an uptrend, Parabolic SAR dots appear below price and rise gradually, providing a trailing stop that locks in profits.