CMT Level II Exam (CMT-Level-II) Free Practice Test

Question 1

Intermarket analysis can be used for which investment decisions?

A. Decisions among mutual fund

B. Decisions among asset classes

C. Decisions among equity market sectors

D. All of the above

Correct Answer: D

Question 2

Which of the following graphical representation is used to plot a single statistic?

A. Line charts

B. Point-and-figure charts

C. Candlestick charts

D. Bar charts

Correct Answer: A

Question 3

Which of the following is the best combination which results in respect to the volume and pullback in Diamond Top pattern?

A. The best mix is when there is a downward breakout on less than normal breakout rate and with few pullbacks

B. The best combination is when a downward breakout happens on an under-average amount of breakout with no pullback

C. The best combination is when there is a downward breakout at an above-average breakout rate with few pullbacks

D. The best combination is when there is an upward breakout on less than normal breakout volume with no pullback

Correct Answer: B

Question 4

Which of the following are FALSE statements when describing the Chaikin Money Flow Index?

A. It measures deviations of price within two standard deviations of the range.

B. The index will rise above zero in an upward trend

C. It suffers from the "drop off" effect, as it uses a simple moving average.

D. Gaps will not be recorded, as the index only uses the day high, day low, and closing price.

Correct Answer: A

Question 5

Which of the following conditions is an absolute must for a true divergence based on the MACD histogram?

A. Breaking of the centerline

B. The MACD histogram has to record atleast a 200 bar low/high on the first trough/peak

C. Price action extended above/below the 26 week moving average

D. Confirmation from the MACD fast line and signal line

Correct Answer: A

Question 6

What of the following could be utilized in a computerized trading system to improve the performance of Wilder's Parabolic System?

A. Average divergence index

B. Stops

C. Directional movement index

D. Trend lines

Correct Answer: C

Question 7

Which of the following is typically a period of heavier volume?

A. Day before a holiday

B. Summer days

C. Triple witching days

D. First day of the week

Correct Answer: C

Question 8

A technical analyst was at a convention in which a long-term point and figure stock chart was being discusseD. He noticed that low-price action did not appear as active as high-price action on the chart. One suggestion the technical analyst could provide, to clear up this apparent distortion, would be to:

A. Change the charting scale to logarithmic

B. Increase the time frame on the chart

C. Add the daily opening prices to provide a more visual benchmark of price changes

D. Change the scale to arithmetic

Correct Answer: A

Question 9

What is the bearish counterpart to the Piercing Line candlestick pattern?

A. Hanging Man

B. 3 Black Crows

C. Shooting Star followed by an Inverted Hammer

D. Dark Cloud Cover

Correct Answer: D

Question 10

How would one improve a trading system utilizing band penetrations as trading signals which is giving too many unprofitable trade signals?

A. Utilize stop loss orders

B. Widen the bands

C. Narrow the bands

D. Utilize a shorter time horizon

Correct Answer: B

Question 11

What is the measuring objective for flags and pennants?

A. The move after the pattern will be equal to the move before the pattern

B. Half the distance of the preceding move from breakout to the flag or pennant

C. Flags fly at half mast and pennants are considered reversal patterns

D. There is a different measuring objective for each

Correct Answer: A

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CMT Association CMT Level II (CMT-Level-II) Free Practice Test