📊 NISM Series XVChapter 15 of 15⚖ 15 marks weightageCase-Based ✓
Ch.15: Technical Analysis
Practice questions for NISM-Series-XV: Research Analyst Certification Examination
(mandated by SEBI under the Research Analysts Regulations, 2014).
Chapter 15 carries 15 out of 100 marks
in the final examination. The exam has 80 MCQs + 5 case-based sets, 120-minute duration,
60% passing score, and −0.25 negative marking per wrong answer.
70
MCQ
3
Case Sets
82
Total Qs
15
Exam Marks
60%
Pass Score
−0.25
Neg. Marking
What You Will Learn in This Chapter
Interpret candlestick, bar and line charts for price analysis
Apply Dow Theory, support/resistance, and trend analysis
Use technical indicators: moving averages, RSI, MACD, Bollinger Bands
Key Terms:candlestick chartsupportresistancemoving averageRSIMACDBollinger BandsDow Theory
Multiple Choice Questions (70)
Q1MCQHardChart Types - Heikin-Ashi
The Heikin-Ashi chart is an adjusted candlestick chart designed to average price data and reduce noise. What specific advantage does this chart type offer to a trader, according to the text?
AIt captures intraday price movements (Open, High, Low).
BIt focuses solely on price movements, ignoring time and volume.
✓It helps the trader to remain longer in the trade by filtering out whipsaws.
DIt is best suited for identifying breakout levels and support/resistance zones.
💡 The description for Heikin-Ashi Chart states: 'It helps the trader to remain longer in the trade by filtering out whipsaws.'
Q2MCQMediumDow Theory Tenets
According to Dow Theory, which of the following best describes the 'Secondary trend'?
AA long-term movement, representing either a bull or bear market.
BA minor trend reflecting short-term fluctuations, lasting days to weeks.
✓A correction or rally within the primary trend, typically lasting weeks to months.
DThe phase where smart money enters quietly, preceding public participation.
💡 The text states under 'The Market Has Three Trends': 'The Secondary trend is a correction or rallies within the primary trend (weeks to months).'
Q3MCQEasyChart Types
Which type of chart is ideally suited for quick trend visualization and a long-term perspective but does not capture intraday price movements?
ABar Chart
BCandlestick Chart
✓Line Chart
DPoint and Figure Chart
💡 The text describes the Line Chart as using 'closing prices over time as a continuous line' and being 'ideally suited for quick trend visualization and long-term perspective' while noting 'It does not capture intraday price movements'.
Q4MCQHardDow Theory Phases
The phase where "smart money enters quietly" and the phase where "retail investors often enter/exit late" during a primary trend correspond to which two phases, respectively, according to Dow Theory?
APublic Participation and Distribution.
BAccumulation and Public Participation.
✓Accumulation and Distribution.
DDistribution and Accumulation.
💡 Tenet iii. 'The Primary Trends Have Three Phases' states: 'The accumulation phase is the phase when smart money enters quietly.' and 'The distribution phase is when smart money exit; retail investors often enter/exit late.'
Q5MCQMediumChart Types
A trader wants to identify patterns like Doji, Hammer, and Engulfing, and understand market psychology through color-coded bodies. Which chart type would be most suitable for this purpose?
ALine Chart
BBar Chart
✓Candlestick Chart
DRenko Chart
💡 The text notes that the Candlestick Chart 'is best suited for identifying patterns like Doji, Hammer, Engulfing etc. and market psychology' and 'uses color-coded bodies to easily identify and interpret trends'.
Q6MCQMediumMarket Trends
What is the typical duration of a secondary trend, as described in the text?
AA few days to a few weeks
BOne year or more
✓A few weeks to several months
DLess than three weeks
💡 The text defines secondary trends as intermediate movements that typically last from a few weeks to several months.
Q7MCQEasyChart Types
Which chart type is best suited for quick trend visualization and does not capture intraday price movements?
ABar Chart
BCandlestick Chart
✓Line Chart
DPoint and Figure Chart
💡 The text specifies for Line Chart: 'It is ideally suited for quick trend visualization and long-term perspective. It does not capture intraday price movements i.e., open, high, low.'
Q8MCQHardSecondary Trends
What is a typical characteristic of a secondary trend's retracement within a primary move, as per Dow Theory?
AIt typically lasts for less than three weeks.
BThe volumes are usually higher than the primary trend, indicating strong conviction.
✓The retracement can range from 1/3rd to 2/3rd of the previous primary move.
DIt is primarily driven by smart money exiting the market.
💡 The text states under 'Secondary Trend - Typical Characteristics' that 'The retracement can range from 1/3rd to 2/3rd of the previous primary move (as per Dow Theory)'.
Q9MCQEasyChart Types
Which type of chart uses only closing prices over time as a continuous line and does not capture intraday price movements?
ABar Chart
BCandlestick Chart
✓Line Chart
DPoint and Figure Chart
💡 The text describes the Line Chart: 'This type of chart uses closing prices over time as a continuous line. ... It does not capture intraday price movements i.e., open, high, low.'
Q10MCQHardChart Types Comparison
A technical analyst wants to analyze long-term trends while filtering out minor fluctuations and ignoring the element of time. Which chart type would be most appropriate for this specific requirement?
ALine Chart
BBar Chart
✓Point and Figure Chart
DHeikin-Ashi Chart
💡 The text states for Point and Figure Chart: 'It only focuses on the price movements and ignores time and volume. It filters out noise and is ideal for long-term trend analysis.'
Q11MCQEasyDow Theory Tenets
According to Dow Theory, how many primary phases do primary trends typically have?
ATwo
✓Three
CFour
DFive
💡 The text states under 'The Primary Trends Have Three Phases': 'The accumulation phase', 'The public participation phase', and 'The distribution phase'.
Q12MCQMediumMarket Trends - Tertiary Trends
What is the typical duration of a tertiary trend, according to the provided text?
ATypically one year or more
BFrom a few weeks to several months
✓From a few days to a few weeks
DExactly 6 months
💡 The text states that the tertiary trend 'typically lasts from a few days to a few weeks, though some definitions extend this to up to six weeks'.
Q13MCQEasyChart Types
Which chart type is visually much clearer than bar charts, uses color-coded bodies, and is best suited for identifying patterns like Doji and Hammer?
ALine Chart
BRenko Chart
✓Candlestick Chart
DPoint and Figure Chart
💡 The text describes the Candlestick Chart as 'visually much clearer and uses the “candles” to show Open High Low and Close. It is best suited for identifying patterns like Doji, Hammer, Engulfing etc. and market psychology. It uses color-coded bodies to easily identify and interpret trends.'
Which of the following is NOT a typical characteristic of a Secondary Trend as described in the text?
AThey can last for 3 weeks to 3 months.
BThe retracement can range from 1/3rd to 2/3rd of the previous primary move.
✓The volumes could be typically higher than the primary trend, indicating strong conviction.
DThey are often triggered by macroeconomic data releases or central bank policy shifts.
💡 The text states under 'Typical Characteristics' for Secondary Trends: 'The volumes could be typically lower than the primary trend, indicating a lack of conviction.' Option C states 'higher than,' which is incorrect.
Q15MCQHardMarket Trends - Secondary Trends
As per Dow Theory, what is the typical range of retracement for a secondary trend relative to the previous primary move?
ALess than 1/3rd
✓From 1/3rd to 2/3rd
CMore than 2/3rd but less than 100%
DAlways a full 100% retracement
💡 Under 'Secondary Trends - Typical Characteristics', the text states: 'The retracement can range from 1/3rd to 2/3rd of the previous primary move (as per Dow Theory)'.
Q16MCQHardDow Theory and Market Trends
If the Nifty 50 index is showing a clear primary uptrend, but the Sensex index is failing to make new highs and is instead consolidating, which tenet of Dow Theory is being violated or not confirmed?
AThe Market Discounts Everything
BThe Primary Trends Have Three Phases
CVolume Confirms the Trend
✓Indices Must Confirm Each Other
💡 The tenet 'Indices Must Confirm Each Other' states that 'For a trend to be valid, both the major indices must move in the same direction. For e.g., Nifty and Sensex should move together.' If one is trending up and the other is consolidating or declining, this tenet is not met.
Q17MCQMediumTA vs FA
What is a key difference in the time horizon between Technical Analysis and Fundamental Analysis, as described in the text?
ATechnical Analysis is for long-term investment, while Fundamental Analysis is for short-term trading.
✓Technical Analysis focuses on short/medium-term trading strategies, while Fundamental Analysis is for long-term investment decisions.
CBoth analyses are primarily used for long-term investment decisions.
DBoth analyses are exclusively used for short-term trading strategies.
💡 The comparison table states that Technical Analysis has a 'Short/medium term trading strategies' time horizon, whereas Fundamental Analysis has 'Long-term investment decisions'.
Q18MCQEasyTechnical Analysis Assumptions
One of the core philosophies of Technical Analysis is that 'Price Discounts Everything.' What does this imply?
ATechnical analysts should focus on external fundamentals before price.
✓All known and unknown information is already reflected in the market price.
CMarket prices frequently deviate from their intrinsic values.
DVolume is more important than price in reflecting information.
💡 Under 'Price Discounts Everything,' the text states: 'All known and unknown information such as economic, political, psychological is already reflected in the market price.'
Q19MCQEasyChart Types
Which chart type focuses solely on price movements and ignores time and volume, making it ideal for identifying breakout levels and support/resistance zones?
ACandlestick Chart
BBar Chart
CLine Chart
✓Point and Figure Chart
💡 Under 'Point and Figure Chart': 'It only focuses on the price movements and ignores time and volume. It is widely used for identifying breakout levels and support/resistance zones.'
Q20MCQHardDow Theory Tenets
Which of the six tenets of Dow Theory emphasizes that for a trend to be valid, major indices, such as Nifty and Sensex, must move in the same direction?
AThe Market Discounts Everything
BThe Primary Trends Have Three Phases
CVolume Confirms the Trend
✓Indices Must Confirm Each Other
💡 Tenet (iv) 'Indices Must Confirm Each Other' states: 'For a trend to be valid, both the major indices must move in the same direction. Foe e.g., Nifty and Sensex should move together.'
Q21MCQMediumCore Philosophy of Technical Analysis
Which core philosophy of Technical Analysis assumes that all known and unknown information, including economic, political, and psychological factors, is already reflected in the market price?
AHistory Repeats Itself
✓Price Discounts Everything
CPrice Moves in Trends
DVolume Confirms Price
💡 Under 'Core philosophy and assumptions,' point (i) is 'Price Discounts Everything,' which states, 'All known and unknown information such as economic, political, psychological is already reflected in the market price.'
Q22MCQEasyDow Theory Tenets
According to Dow Theory, which of the following confirms the trend?
AThe market's intrinsic value.
✓Volume.
CThe company's earnings reports.
DAnalyst recommendations.
💡 Tenet v. of Dow Theory states: 'Volume Confirms the Trend. The volume should increase in the direction of the primary trend.'
Q23MCQMediumTechnical vs Fundamental Analysis
Which of the following statements accurately differentiates Technical Analysis from Fundamental Analysis based on their typical time horizon?
ATechnical Analysis is for long-term investment decisions, while Fundamental Analysis is for short/medium term trading strategies.
✓Technical Analysis focuses on short/medium term trading strategies, while Fundamental Analysis is for long-term investment decisions.
CBoth Technical and Fundamental Analysis are primarily used for long-term investment decisions.
DBoth Technical and Fundamental Analysis are primarily used for short/medium term trading strategies.
💡 The comparison table explicitly states 'Time Horizon: Short/medium term trading strategies' for Technical Analysis and 'Long-term investment decisions' for Fundamental Analysis.
Q24MCQEasyDow Theory - Volume
According to Dow Theory, what role does volume play in confirming a trend?
AVolume should decrease in the direction of the primary trend.
✓Volume should increase in the direction of the primary trend.
CVolume is irrelevant for trend confirmation.
DVolume confirms reversals, not trends.
💡 The fifth tenet of Dow Theory, 'Volume Confirms the Trend,' states: 'The volume should increase in the direction of the primary trend.'
Q25MCQEasyIntroduction to Technical Analysis
What is the primary focus of technical analysis when evaluating securities?
AA company’s financial health and intrinsic value.
✓Statistical trends gathered from trading activity, primarily price and volume.
CMacroeconomic indicators and geopolitical stability.
DManagement quality and competitive landscape.
💡 The text states, 'Technical Analysis is a method of evaluating securities by analyzing statistical trends gathered from trading activity, primarily price and volume.'
Q26MCQHardChart Types Specificity
A trader wants to identify patterns like Doji, Hammer, and Engulfing, and also interpret market psychology through color-coded bodies. Which chart type would be most suitable for this purpose?
ABar Chart
✓Candlestick Chart
CRenko Chart
DHeikin-Ashi Chart
💡 The text states for Candlestick Chart: 'It is best suited for identifying patterns like Doji, Hammer, Engulfing etc. and market psychology. It uses color-coded bodies to easily identify and interpret trends.'
Q27MCQMediumTechnical vs. Fundamental Analysis
A long-term investor seeking to identify undervalued or overvalued assets would most likely follow which type of analysis, according to the comparison table?
ATechnical Analysis
BQuantitative Analysis
✓Fundamental Analysis
DBehavioral Analysis
💡 The 'Technical Analysis versus Fundamental Analysis' table lists 'Objectives' for Fundamental Analysis as 'Identify undervalued or overvalued assets' and 'Followed by' 'Long-term investors.'
Q28MCQEasyChart Types
Which chart type uses only closing prices over time as a continuous line and does not capture intraday price movements?
ABar Chart
BCandlestick Chart
✓Line Chart
DPoint & Figure Chart
💡 The text states that the Line Chart uses closing prices over time as a continuous line and does not capture intraday price movements (open, high, low).
Q29MCQEasyTechnical Analysis Philosophy
Which of the following is a core assumption of technical analysis?
AMarket prices always deviate from their intrinsic values.
✓All known and unknown information is already reflected in the market price.
CFundamental analysis is irrelevant for long-term investment decisions.
DVolume trends are not used to confirm price movements.
💡 One of the core philosophies of Technical Analysis is 'Price Discounts Everything', meaning all known and unknown information is already reflected in the market price.
Q30MCQHardTertiary Trend Characteristics
Which of the following is NOT a typical characteristic of a Tertiary trend as described in the text?
AThey typically last less than three weeks.
BThey are often highly volatile and reactive to news.
CVolume patterns are less reliable than in primary trends.
✓They are reliable for long-term forecasting.
💡 Under 'Characteristics of Tertiary Trends', it states: 'They reverse frequently and quickly, making them unreliable for long-term forecasting.' Options A, B, and C are all listed as characteristics.
Q31MCQEasyMarket Trends - Tertiary Trend
Which type of market trend reflects short-term fluctuations, typically lasting from a few days to a few weeks?
APrimary trend
BSecondary trend
✓Tertiary trend
DCyclical trend
💡 The text defines the tertiary trend as 'short-term price movements within a broader market trend. It typically lasts from a few days to a few weeks'.
Q32MCQMediumSecondary Trends
In a Bull Market, what is the term for a secondary trend characterized by a temporary decline (often 10–20%) before the primary uptrend resumes?
ARally
BDistribution Phase
✓Correction
DWhipsaw
💡 Under 'Types of Secondary Trends,' for a 'Bull Market,' the 'Secondary Trend Type' is 'Correction' with the description 'A temporary decline (often 10–20%) before resuming the uptrend.'
Q33MCQEasyChart Types
Which chart type uses closing prices over time as a continuous line and is ideally suited for quick trend visualization and long-term perspective?
ABar Chart
BCandlestick Chart
✓Line Chart
DPoint and Figure Chart
💡 The line chart uses closing prices over time as a continuous line and is ideally suited for quick trend visualization and long-term perspective.
Q34MCQMediumDow Theory Tenets
The Dow Theory tenet 'The Market Discounts Everything' is stated to align with which economic hypothesis?
ARational Expectations Hypothesis
BAdaptive Market Hypothesis
✓Efficient Market Hypothesis (EMH)
DRandom Walk Hypothesis
💡 The text explicitly states that the tenet 'The Market Discounts Everything' aligns with the Efficient Market Hypothesis (EMH).
Q35MCQMediumMarket Trends - Secondary Trend
According to Dow Theory, what is the typical retracement range for a secondary trend relative to the previous primary move?
A1/4th to 1/2
✓1/3rd to 2/3rd
C1/2 to 3/4th
DLess than 1/4th
💡 The text states under 'Typical Characteristics' of secondary trends that 'The retracement can range from 1/3rd to 2/3rd of the previous primary move (as per Dow Theory)'.
Q36MCQHardSecondary Trends & Tools
A swing trader aims to capitalize on intermediate moves within a broader market trend. Which type of trend is most relevant for this strategy, and which tool is specifically mentioned for identifying likely reversal zones within such a trend?
APrimary Trend; Moving Averages (50 or 100 DMA)
✓Secondary Trend; Fibonacci Retracement
CTertiary Trend; 5-day EMA
DPrimary Trend; Volume Profile
💡 Under 'Strategic Implications' for Secondary Trends, it states, 'Understanding secondary trends is vital for... Swing trading: Capitalizing on intermediate moves within the broader trend.' And under 'Tools to Identify Secondary Trends,' 'Fibonacci Retracement' is listed to 'Identifies likely reversal zones (38.2%, 50%, 61.8%) within a trend.'
Q37MCQHardDow Theory - Primary Trend Phases
In which phase of a primary trend, according to Dow Theory, do 'smart money' investors quietly enter the market?
APublic Participation Phase
BDistribution Phase
✓Accumulation Phase
DCorrection Phase
💡 The text states under 'The Primary Trends Have Three Phases': 'The accumulation phase is the phase when smart money enters quietly.'
Q38MCQMediumDow Theory Market Trends
In Dow Theory, what is the typical duration for a Secondary trend?
AFrom a few days to a few weeks.
BOne year or more.
✓From a few weeks to several months.
DLess than three days.
💡 Under 'The Market Has Three Trends', the Secondary trend is described as 'a correction or rallies within the primary trend (weeks to months).' Later, under 'Secondary Trend,' it states 'These trends typically last from a few weeks to several months.'
Q39MCQEasyDow Theory - Market Trends
According to Dow Theory, what is the typical duration for a Tertiary trend?
AOne year or more
BA few weeks to several months
✓A few days to a few weeks
DIndefinite, until a clear reversal
💡 The text states, 'The tertiary trend typically lasts from a few days to a few weeks, though some definitions extend this to up to six weeks.'
Q40MCQMediumTechnical vs. Fundamental Analysis
According to the comparison table, what is the typical time horizon for strategies followed by fundamental analysts?
AShort-term trading strategies
BMedium-term trading strategies
✓Long-term investment decisions
DIntraday fluctuations
💡 The table 'Technical Analysis versus Fundamental Analysis' lists 'Time Horizon' for 'Fundamental Analysis' as 'Long-term investment decisions.'
Q41MCQMediumChart Types
A trader wishes to identify patterns like Doji, Hammer, and Engulfing, and interpret market psychology. Which chart type is best suited for this purpose?
ALine Chart
BBar Chart
✓Candlestick Chart
DPoint & Figure Chart
💡 The text indicates that the Candlestick Chart is 'best suited for identifying patterns like Doji, Hammer, Engulfing etc. and market psychology'.
Q42MCQMediumDow Theory Tenets
Which tenet of Dow Theory states that for a trend to be valid, major indices must move in the same direction, such as Nifty and Sensex?
AThe Market Discounts Everything
BVolume Confirms the Trend
✓Indices Must Confirm Each Other
DTrends Persist Until Clear Reversal
💡 The text describes the tenet 'Indices Must Confirm Each Other' as: 'For a trend to be valid, both the major indices must move in the same direction. Foe e.g., Nifty and Sensex should move together.'
Q43MCQMediumChart Types
Which chart type is visually clearer than bar charts, best suited for identifying patterns like Doji, Hammer, and Engulfing, and uses color-coded bodies?
ABar Chart
✓Candlestick Chart
CRenko Chart
DHeikin-Ashi Chart
💡 The Candlestick Chart section states: 'It is quite similar to bar charts but is visually much clearer... It is best suited for identifying patterns like Doji, Hammer, Engulfing etc. and market psychology. It uses color-coded bodies to easily identify and interpret trends.'
Q44MCQEasyIntroduction to Technical Analysis
What is the primary focus of technical analysis, according to the provided text?
AA company's financial health and intrinsic value.
✓Statistical trends gathered from trading activity, primarily price and volume.
CMacroeconomic indicators and geopolitical stability.
DManagement quality and competitive landscape.
💡 The text states, "Technical Analysis is a method of evaluating securities by analyzing statistical trends gathered from trading activity, primarily price and volume."
Q45MCQMediumPrimary Trend Drivers
Which of the following is identified as an underlying driver of primary trends in the market?
AShort-term earnings surprises
BTechnical exhaustion (e.g., overbought RSI)
✓Geopolitical stability
DMinor intraday price fluctuations
💡 Under 'Primary Trends - Underlying Drivers', the text lists 'Geopolitical stability' as a factor. Short-term earnings surprises and technical exhaustion are causes for secondary trends.
Q46MCQMediumDow Theory
According to Dow Theory, for a trend to be valid, both the major indices must move in the same direction. Which pair of indices is given as an example in the text?
✓Nifty and Sensex
BNifty and Bank Nifty
CSensex and Dollar Index
DGold and Crude Oil
💡 The text states, 'For a trend to be valid, both the major indices must move in the same direction. Foe e.g., Nifty and Sensex should move together.'
Q47MCQMediumTechnical vs. Fundamental Analysis
Which of the following is an assumption of Technical Analysis, as opposed to Fundamental Analysis?
AMarket prices may deviate from their intrinsic values.
✓Current market price captures all relevant information.
CLong-term investment decisions are the primary objective.
DCash flow statements are the main tool.
💡 The text states that a key assumption of Technical Analysis is that 'Current market price captures all the information', whereas Fundamental Analysis assumes 'At times market prices may deviate from their intrinsic values'.
Q48MCQEasyAssumptions of Technical Analysis
Which of the following is a core assumption of technical analysis regarding market prices?
AMarket prices are often manipulated and do not reflect true value.
✓All known and unknown information is already reflected in the market price.
CMarket prices are primarily driven by a company's future earnings potential.
DPrice movements are random and unpredictable.
💡 The first core philosophy point is 'Price Discounts Everything,' stating 'All known and unknown information such as economic, political, psychological is already reflected in the market price.'
Q49MCQEasyIntroduction to Technical Analysis
What is the primary focus of Technical Analysis as described in the text?
ADetermining the intrinsic value of an asset.
✓Analyzing statistical trends from trading activity, primarily price and volume.
CEvaluating a company's financial health and management.
DAssessing macroeconomic factors like GDP and inflation.
💡 The text states, 'Technical Analysis is a method of evaluating securities by analyzing statistical trends gathered from trading activity, primarily price and volume.'
Q50MCQMediumChart Types
Which chart type is described as being best suited for identifying patterns like Doji, Hammer, and Engulfing, and uses color-coded bodies for clarity?
ALine Chart
BBar Chart
✓Candlestick Chart
DPoint and Figure Chart
💡 The text states under 'Candlestick Chart': 'It is best suited for identifying patterns like Doji, Hammer, Engulfing etc. and market psychology. It uses color-coded bodies to easily identify and interpret trends.'
Q51MCQEasyDow Theory - Trends
According to Dow Theory, how many distinct trends does the market possess?
ATwo: Primary and Secondary
✓Three: Primary, Secondary, and Tertiary
CFour: Major, Intermediate, Minor, and Sideways
DOne: The dominant long-term trend
💡 One of the Six Tenets of Dow Theory is 'The Market Has Three Trends', specifying Primary, Secondary, and Tertiary trends.
Q52MCQMediumSecondary Trends
Which technical tool is specifically mentioned as identifying likely reversal zones (38.2%, 50%, 61.8%) within a trend for secondary movements?
AMoving Averages (50 DMA)
BRSI/Stochastic Oscillator
✓Fibonacci Retracement
DTrendlines & Channels
💡 Under 'Tools to Identify Secondary Trends', Fibonacci Retracement is described as identifying 'likely reversal zones (38.2%, 50%, 61.8%) within a trend.'
Q53MCQEasyTechnical Analysis Assumptions
Which of the following is a core philosophy of Technical Analysis?
AMarket prices often deviate from their intrinsic values.
✓All known and unknown information is already reflected in the market price.
CFuture price movements are guaranteed based on past patterns.
DThe primary focus should be on a company’s financial health.
💡 The text states that a core philosophy of Technical Analysis is 'Price Discounts Everything', meaning 'All known and unknown information... is already reflected in the market price.'
Q54MCQHardChart Types
A technical analyst wants to analyze price movements while filtering out noise and ignoring time and volume. Which chart type should they use?
ARenko Chart
BHeikin-Ashi Chart
✓Point & Figure Chart
DBar Chart
💡 The text describes the Point & Figure Chart as one that 'only focuses on the price movements and ignores time and volume' and 'filters out noise'. While Renko also ignores time, Point & Figure explicitly mentions ignoring volume.
Q55MCQEasyTechnical Analysis Introduction
According to the core philosophy of Technical Analysis, what does the market price primarily reflect?
AThe company's future earnings potential
✓All known and unknown economic, political, and psychological information
COnly the historical volume of trades
DThe intrinsic value determined by financial statements
💡 The text states that one of the core philosophies is 'Price Discounts Everything', meaning 'All known and unknown information such as economic, political, psychological is already reflected in the market price.'
Q56MCQMediumDow Theory Phases
In which phase of a primary trend, according to Dow Theory, does 'smart money' quietly enter the market?
APublic participation phase
BDistribution phase
✓Accumulation phase
DCapitulation phase
💡 The Dow Theory's third tenet, 'The Primary Trends Have Three Phases', states that 'The accumulation phase is the phase when smart money enters quietly.'
Q57MCQMediumChart Types - Point and Figure
Which chart type exclusively focuses on price movements, ignoring both time and volume, and is widely used for identifying breakout levels and support/resistance zones?
ABar Chart
BRenko Chart
✓Point and Figure Chart
DHeikin-Ashi Chart
💡 The text describes the Point and Figure Chart as one that 'only focuses on the price movements and ignores time and volume. It is widely used for identifying breakout levels and support/resistance zones.'
Q58MCQHardChart Types
A chart type that only focuses on price movements, ignores time and volume, filters out noise, and is ideal for long-term trend analysis and identifying breakout levels, is known as a:
AHeikin-Ashi Chart
BRenko Chart
✓Point and Figure Chart
DBar Chart
💡 The description for the Point and Figure Chart states: 'It only focuses on the price movements and ignores time and volume. It is widely used for identifying breakout levels and support/resistance zones. It filters out noise and is ideal for long-term trend analysis.'
Q59MCQHardTertiary Trends
Which characteristic is NOT typically associated with tertiary trends as per the provided text?
AThey often move counter to the primary or secondary trend.
BThey are generally less reliable for long-term forecasting.
✓Volume patterns are consistently reliable for confirmation.
DThey are highly volatile and reactive to news events.
💡 The text states for tertiary trends: 'They may show spikes in volume during breakouts or breakdowns, but volume patterns are less reliable than in primary trends.' Therefore, consistently reliable volume patterns is incorrect.
Q60MCQEasyTechnical Analysis Introduction
Which of the following is NOT explicitly mentioned as a core assumption or philosophy of Technical Analysis in the provided text?
APrice Discounts Everything
BPrice Moves in Trends
CMarket Action is Predictable (to a degree)
✓Fundamental News Drives Price Action
💡 The core philosophies listed are: Price Discounts Everything, Price Moves in Trends, History Repeats Itself, Market Action is Predictable (to a degree), and Volume Confirms Price. 'Fundamental News Drives Price Action' contradicts the 'Price Discounts Everything' assumption.
Q61MCQMediumPrimary Trends - Underlying Drivers
All of the following are mentioned as underlying drivers of Primary Trends EXCEPT:
AEconomic cycles (growth vs recession).
BGeopolitical stability.
✓Specific company earnings surprises.
DMonetary policy (interest rates, liquidity).
💡 Under 'Underlying Drivers' for Primary Trends, the text lists: 'Economic cycles,' 'Monetary policy,' 'Fiscal policy,' 'Geopolitical stability,' and 'Investor psychology.' Specific company earnings surprises are mentioned as a trigger for Secondary Trends, not Primary Trends.
Q62MCQEasyDow Theory
According to Dow Theory, how many distinct trends does the market have?
AOne
BTwo
✓Three
DFour
💡 One of the Six Tenets of Dow Theory is 'The Market Has Three Trends': Primary, Secondary, and Tertiary.
Q63MCQEasyTechnical Analysis Assumptions
According to the core philosophy of Technical Analysis, what is the role of volume in relation to price movements?
AVolume is irrelevant as price discounts everything.
✓Volume confirms price movements and signals strength or weakness.
CHigh volume during reversals indicates a temporary fluctuation.
DVolume is primarily used to determine the intrinsic value of an asset.
💡 Under the core philosophy 'Volume Confirms Price', the text states: 'Volume trends help validate price movements and signal strength or weakness. High volume during breakouts or reversals adds credibility to the move.'
Q64MCQHardChart Types
Which chart type is characterized by only focusing on price movements, ignoring time and volume, and is widely used for identifying breakout levels and support/resistance zones?
ARenko Chart
BHeikin-Ashi Chart
CBar Chart
✓Point and Figure Chart
💡 The Point and Figure Chart 'only focuses on the price movements and ignores time and volume. It is widely used for identifying breakout levels and support/resistance zones.'
Q65MCQEasyIntroduction to Technical Analysis
What is the primary data source for Technical Analysis?
AFinancial statements
BEconomic reports
✓Historic price and volume data
DIndustry publications
💡 According to the text, Technical Analysis evaluates securities by analyzing statistical trends gathered from trading activity, primarily price and volume. This contrasts with fundamental analysis which uses financial statements and economic reports.
Q66MCQMediumChart Types - Heikin-Ashi
What is the specific function of a Heikin-Ashi chart as described in the text?
ATo ignore time and volume, focusing only on price movements.
BTo highlight the price range and directional bias for detailed price action.
✓To average price data to reduce noise and help traders remain longer in a trade by filtering out whipsaws.
DTo use fixed price movements (bricks) rather than time intervals for momentum tracking.
💡 The text explains that the Heikin-Ashi Chart 'average price data to reduce noise' and 'helps the trader to remain longer in the trade by filtering out whipsaws.'
Q67MCQMediumPrimary Trend Drivers
Which of the following is explicitly listed as an underlying driver of Primary trends?
ACompany-specific earnings surprises.
BTechnical exhaustion (e.g., overbought RSI).
✓Geopolitical stability.
DShort-term news events.
💡 Under '15.4.1 Primary Trend', 'Underlying Drivers' include 'Geopolitical stability.' Options A, B, and D are listed as causes/catalysts for Secondary or Tertiary trends.
Q68MCQMediumTechnical vs. Fundamental Analysis
Which statement accurately differentiates Technical Analysis from Fundamental Analysis based on their assumptions?
ATechnical Analysis assumes market prices may deviate from intrinsic values, while Fundamental Analysis assumes current market price captures all information.
✓Technical Analysis assumes the current market price captures all information, while Fundamental Analysis assumes market prices may deviate from their intrinsic values.
DBoth analyses assume market prices are often irrational and unpredictable.
💡 The table 'Technical Analysis versus Fundamental Analysis' under 'Assumptions' states: 'Technical Analysis: Current market price captures all the information; trend is likely to continue.' and 'Fundamental Analysis: At times market prices may deviate from their intrinsic values.'
Q69MCQEasyPrimary Trends
A sustained upward movement in prices, driven by optimism, growth, and liquidity, lasting typically one year or more, is classified as what type of primary trend?
ABear Market
BSideways Market
✓Bull Market
DCorrection
💡 The text describes a Bull Market as a 'Sustained upward movement in prices, driven by optimism, growth, and liquidity.'
Q70MCQEasyTA vs. FA
What is the primary data source for Technical Analysis?
AFinancial statements and economic reports
✓Historic price and volume data
CIndustry publications and news articles
DCash flow statements and DCF valuations
💡 The table comparing Technical and Fundamental Analysis states that the Data Source for Technical Analysis is 'Historic price and volume data'.
Case-Based Questions (3 sets)
Case 1Case-BasedTechnical Analysis Application
Priya, a research analyst, is evaluating 'TechInnovate Ltd.' (TIL) for a short-term trading recommendation. TIL has been in a robust primary uptrend for the past 18 months, characterized by higher highs and higher lows. Recently, the stock experienced a sharp 15% decline over three weeks, accompanied by noticeably lower trading volumes compared to its previous upward rallies. This decline brought TIL's price close to its 50-day moving average, a key level from which it has historically found support during its primary uptrend. Priya suspects this might be a temporary correction rather than a trend reversal. She is now analyzing various chart types and technical indicators, including Fibonacci retracements and the Relative Strength Index (RSI), to confirm her hypothesis and identify optimal entry points. She also notes that while the broader market indices (Nifty and Sensex) have shown some minor weakness, they remain above their long-term trendlines, aligning with the Dow Theory's principle of index confirmation. Her ultimate goal is to capitalize on the anticipated continuation of TIL's primary uptrend.
Medium Sub-question 1
Priya is considering using 'Fibonacci retracements and the Relative Strength Index (RSI)' to confirm her hypothesis and identify optimal entry points. Which chart type would be most suitable for effectively applying these indicators and observing detailed price action, including open, high, low, and close prices, to identify patterns like Doji or Hammer?
ALine Chart
BPoint and Figure Chart
✓Candlestick Chart
DRenko Chart
💡 Candlestick charts provide detailed OHLC price information and are specifically noted in the text as being 'best suited for identifying patterns like Doji, Hammer, Engulfing etc. and market psychology,' which would be crucial for precise entry point identification using indicators like Fibonacci and RSI.
Medium Sub-question 2
Priya observed that the recent 15% decline in TIL's price was accompanied by 'relatively lower trading volumes.' According to technical analysis principles, what does this volume characteristic suggest about the nature of this decline?
AHigh volume during a decline confirms a strong bearish primary trend reversal.
✓Low volume during a decline suggests a lack of conviction, indicating it's likely a temporary correction.
CVolume is irrelevant for confirming secondary trends; only price action matters.
DHigh volume during a decline confirms the continuation of the primary uptrend.
💡 The text states that for secondary trends, 'The volumes could be typically lower than the primary trend, indicating a lack of conviction.' This suggests the move is a temporary correction rather than a sustained reversal.
Hard Sub-question 3
Priya notes that 'while the broader market indices (Nifty and Sensex) have shown some minor weakness, they remain above their long-term trendlines.' How does this observation, in the context of Dow Theory, support Priya's hypothesis that TIL's primary uptrend will likely continue?
AIt contradicts Dow Theory, as indices must show strength, not weakness, for individual stocks to continue an uptrend.
✓It supports Dow Theory's tenet that 'Indices Must Confirm Each Other,' implying the broader market's overall strength validates TIL's primary trend.
CIt suggests that the primary trend has already reversed, as minor weakness in indices is a leading indicator of a bear market.
DDow Theory primarily focuses on individual stock volume and price, not broader market indices.
💡 The Dow Theory tenet 'Indices Must Confirm Each Other' states that for a trend to be valid, both major indices must move in the same direction. If Nifty and Sensex are above long-term trendlines, they are still in an uptrend, confirming the overall market strength, which supports the continuation of TIL's primary uptrend despite its temporary weakness.
Easy Sub-question 4
Based on Priya's observation of TIL's 18-month uptrend followed by a 3-week, 15% decline, how would Dow Theory classify these two movements respectively?
APrimary trend (uptrend) and Tertiary trend (correction)
✓Primary trend (uptrend) and Secondary trend (correction)
CSecondary trend (uptrend) and Tertiary trend (correction)
DPrimary trend (uptrend) and Primary trend (reversal)
💡 The primary trend is a long-term movement (18 months), while a decline lasting a few weeks to several months and correcting the primary trend is classified as a secondary trend.
Case 2Case-BasedChart Types and Technical Analysis Fundamentals
Deepak, a newly certified Research Analyst, is examining the recent price behavior of 'Global Pharma Ltd.' (GPL). He is particularly interested in identifying short-term trading opportunities and understanding market psychology reflected in price action. He initially uses a line chart, but finds it lacks detail for intraday movements. He then switches to a daily candlestick chart and observes several 'Doji' patterns appearing over the past week, often after sharp moves. Deepak is also grappling with the core assumptions of technical analysis, particularly how it differs from fundamental analysis. His senior analyst reminds him that market behavior is often cyclical and driven by human psychology, leading to recurring patterns. Deepak is trying to filter out minor fluctuations to get a clearer picture of the underlying trend, but also needs to be aware of rapid, news-driven price changes that might last only a few days.
Easy Sub-question 1
Deepak finds the line chart lacking detail for intraday movements. Which chart type, among those mentioned in the text, would be most suitable for Deepak to analyze intraday open, high, low, and close prices?
APoint and Figure Chart
BRenko Chart
✓Bar Chart (OHLC)
DHeikin-Ashi Chart
💡 The Bar Chart (OHLC chart) is specifically designed to show the Open, High, Low, and Close prices for a given time period, making it ideal for detailed price action analysis including intraday movements, unlike the line chart which only uses closing prices.
Easy Sub-question 2
Deepak's senior analyst reminds him that market behavior is often cyclical and driven by human psychology, leading to recurring patterns. Which core philosophy or assumption of technical analysis does this statement align with?
APrice Discounts Everything
BPrice Moves in Trends
✓History Repeats Itself
DVolume Confirms Price
💡 The statement 'market behavior is cyclical and driven by human psychology, leading to recurring patterns' directly reflects the core technical analysis assumption that 'History Repeats Itself,' as human psychology tends to react to similar market conditions in predictable ways.
Hard Sub-question 3
Deepak needs to filter out minor fluctuations to get a clearer picture of the underlying trend, but also needs to be aware of rapid, news-driven price changes that might last only a few days. If he wants to filter out noise and focus solely on significant price movements by using fixed price movements (bricks) rather than time intervals, which chart type would be most appropriate for this specific goal?
ALine Chart
BBar Chart
CCandlestick Chart
✓Renko Chart
💡 Renko charts use fixed price movements (bricks) rather than time intervals, which helps to smooth out minor fluctuations and provide clarity on trends, making them suitable for filtering noise and focusing on significant price action.
Medium Sub-question 4
Deepak observes 'Doji' patterns on the daily candlestick chart, often after sharp moves. What does the appearance of 'Doji' patterns on a candlestick chart typically suggest about market psychology at that moment?
AStrong bullish momentum and continuation.
BStrong bearish momentum and continuation.
✓Indecision between buyers and sellers.
DConfirmation of a new primary trend.
💡 Candlestick charts are best suited for identifying patterns like Doji, which typically signals indecision or equilibrium between buyers and sellers, often appearing at potential turning points after sharp moves.
Case 3Case-BasedTechnical Analysis Application
Rohan, a research analyst at 'Alpha Insights', is tasked with preparing a short-to-medium term trading recommendation for 'TechGen Innovations' (TGI) stock. He primarily relies on technical analysis. Over the past year, TGI has shown a sustained upward movement, recently hitting a new 52-week high. However, in the last month, TGI experienced a 12% pullback, consolidating within a narrower range, before showing signs of resuming its upward trajectory. Rohan notes that during this pullback, trading volumes were noticeably lower than during the preceding upward rally. He is observing the stock's price action on a daily candlestick chart, a weekly bar chart, and also reviewing the Nifty IT index's performance for confirmation. He suspects that the recent pullback is a temporary phenomenon within a larger trend. He also notices that the 50-day Moving Average is still well above the 200-day Moving Average, indicating long-term strength. Rohan's objective is to identify if the primary trend is still intact and pinpoint potential entry points.
Medium Sub-question 1
Rohan observes that trading volumes were noticeably lower during the 12% pullback compared to the preceding upward rally. According to Dow Theory, what does this observation primarily suggest about the current market action?
AIt confirms a reversal of the primary trend.
BIt indicates the secondary trend is gaining strength.
✓It suggests the pullback is likely a temporary correction, not a reversal of the primary trend.
DIt implies that smart money is accumulating shares during the pullback.
💡 Dow Theory's tenet 'Volume Confirms the Trend' states that volume should increase in the direction of the primary trend. Lower volume during a counter-trend move (like a pullback) suggests a lack of conviction for the reversal, indicating it's likely a temporary correction rather than a true reversal of the primary trend.
Hard Sub-question 2
Given Rohan's observation of the 50-day Moving Average being well above the 200-day Moving Average, which strategy would be most aligned with his findings, assuming the primary trend is expected to continue?
AShort selling TGI, anticipating further decline.
BAdopting a long-term value investing approach, ignoring technicals.
✓Buying dips in TGI, aligning with a trend-following strategy.
DSwitching to a Renko chart to identify breakout levels more clearly for short-term trades.
💡 A 50-day Moving Average being well above the 200-day Moving Average is a classic bullish signal, indicating a strong primary uptrend. In such a scenario, buying dips (corrections) within the uptrend is a common trend-following strategy to capitalize on the continuation of the primary trend.
Easy Sub-question 3
Rohan is reviewing the Nifty IT index's performance for confirmation. Which tenet of Dow Theory is Rohan applying by observing the Nifty IT index in conjunction with TGI's stock price?
AThe Market Discounts Everything
BThe Market Has Three Trends
✓Indices Must Confirm Each Other
DTrends Persist Until Clear Reversal
💡 The Dow Theory tenet 'Indices Must Confirm Each Other' states that for a trend to be valid, related major indices (like a sector index for a specific stock) must move in the same direction, which Rohan is checking with the Nifty IT index.
Medium Sub-question 4
Based on the scenario, what type of market trend does the recent 12% pullback in TechGen Innovations (TGI) most likely represent within the context of its sustained upward movement over the past year?
APrimary trend
✓Secondary trend
CTertiary trend
DSideways trend
💡 The sustained upward movement over the past year represents a primary trend. A 12% pullback lasting a month is a temporary correction or retracement within this larger trend, which is characteristic of a secondary trend.
About this content: These practice questions are based on the
NISM-Series-XV: Research Analyst Certification Examination Workbook (February 2026)
published by the National Institute of Securities Markets (NISM), Mumbai.
NISM is a SEBI-established institution. Questions cover Technical Analysis with verified answers and explanations.
BullWiser is an independent exam preparation platform — not affiliated with NISM or SEBI.
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