- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 67. Technical Analysis
- Subject 2. Charts Types
CFA Practice Question
A stock jumps 10% in one trading day after being in a long downtrend. The volume for the day is below average. Technicians usually interpret this as a sign of a ______.
A. trend reversal
B. divergence
C. price rally
Explanation: A divergence is a contradiction between two different indicators. The simplest example of divergence is a clear upward trend on declining volume.
User Contributed Comments 1
| User | Comment |
|---|---|
| leftcoast | hmmm...I took the below average volume to mean that the volume was less than the large volume you see near the capitulation of a downtrend. Don't look too deeply into these things. |