CFA Practice Question

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CFA Practice Question

To draw an uptrend line, a technician draws a line connecting the ______ of the price chart.

A. lows
B. highs
C. average of daily lows and highs
Correct Answer: A

An uptrend line has a positive slope and is formed by connecting two or more low points. The second low must be higher than the first for the line to have a positive slope. Uptrend lines act as support and indicate that net demand (demand less supply) is increasing even as the price rises. A rising price combined with increasing demand is very bullish, and shows a strong determination on the part of buyers. As long as prices remain above the trend line, the uptrend is considered solid and intact.

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