Sample Questions

NCFM Technical Analysis Module Mock Test — 5 random MCQs with answers & explanations

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These 5 questions are randomly selected (standard MCQs only, not case-based).

Q1 In Elliott Wave Theory, what does the concept of a "fractal" market imply?

  • A. Large waves are made up of smaller, similar wave patterns Correct Answer
  • B. Market behavior is completely unpredictable
  • C. Waves only happen once in a century
  • D. Price patterns never repeat themselves
Explanation:
"Fractal" means that the same 5-3 wave pattern can be seen on a 1-minute chart, a daily chart, or a yearly chart. Smaller waves combine to form larger waves of the same shape.

Marks: 1

Q2 If the price breaks above the upper Bollinger Band, what is a likely meaning?

  • A. The trend will definitely turn around immediately
  • B. It could mean the upward momentum is very strong and will continue Correct Answer
  • C. It is a sign to sell the stock right away
  • D. It means the market has very low volatility
Explanation:
While touching the band is often "overbought," breaking *through* it in a strong trend shows extreme strength. The price might keep rising along the band for a while.

Marks: 1

Q3 Which evaluation method is most frequently utilized by short-term market participants?

  • A. Fundamental analysis of company balance sheets.
  • B. Studying broad macroeconomic policies.
  • C. Technical analysis of price charts and patterns. Correct Answer
  • D. Qualitative analysis of company management.
Explanation:
Day traders mostly use technical analysis because it focuses on price history and chart patterns to predict quick moves. Since they exit trades before the day ends, they care more about technical signals than long-term company finances.

Marks: 1

Q4 What makes a Piercing Pattern signal more reliable?

  • A. Low trading volume on the second candle
  • B. If the market is already rising quickly
  • C. High trading volume on the second green candle Correct Answer
  • D. Both candles being the same length
Explanation:
High volume shows that many buyers stepped in at the bottom. This adds weight to the bullish reversal signal.

Marks: 1

Q5 Which of these statements contradicts the established principles of Dow Theory?

  • A. The market reflects all available news
  • B. Price movements occur randomly Correct Answer
  • C. Trends persist until a reversal is confirmed
  • D. Volume must confirm the price trend
Explanation:
Dow Theory specifically rejects the idea of random price movement. It teaches that the market moves in identifiable trends and phases that can be studied to make better trading decisions.

Marks: 1

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