Chartered Market Technician (CMT) Practice Exam

Question: 1 / 400

When analyzing candlestick patterns, a long body in the same direction as the existing trend indicates what?

A Reversal of the trend

B Continuation of the current trend

In candlestick analysis, a long body in the same direction as the existing trend signifies strong momentum and conviction among traders. This pattern typically means that buyers or sellers are actively driving prices in the same direction without significant opposition. When you see a long-bodied candlestick, it reflects that a large price movement occurred during the trading period, indicating that the trend is likely to continue.

This continuation is reinforced by the fact that the established trend remains intact. In essence, it demonstrates that traders are maintaining the direction of the market, which supports the idea of a sustained trend rather than a reversal or market indecision. A clear signal of continuation can often be very useful for traders seeking to identify opportunities to align their positions with prevailing market dynamics.

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C Indecision in the market

D Market exhaustion

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