Quiz: Technical Analysis 4 questions · 80% to pass 1. When a stock's support level breaks, that price level often becomes:A stronger support levelResistance, because traders who bought at that level now want to sell at breakevenIrrelevant to future price actionA signal that the stock will recover within daysBroken support becomes resistance. Traders who bought at the old support level are underwater and tend to sell when the price recovers to that level, hoping to exit at breakeven. This creates selling pressure at the former support price.2. A golden cross occurs when:A stock's price hits an all-time highThe 200-day moving average crosses above the 50-dayThe 50-day moving average crosses above the 200-dayTrading volume exceeds the 20-day average by 5xA golden cross forms when the 50-day moving average crosses above the 200-day moving average, signaling that the short-term trend has turned positive relative to the long-term trend. It is a bullish signal, though it lags because it relies on historical data.3. A price breakout above resistance on light volume suggests:Strong buying conviction and a reliable trend changeThe breakout is suspect and more likely to failInstitutional investors are accumulating quietlyVolume does not matter for breakout confirmationVolume confirms or denies price moves. A breakout on heavy volume shows genuine buying conviction. The same breakout on light volume lacks participation and is more likely to reverse. Always check volume to validate a breakout.4. An RSI reading of 25 on a stock suggests:The stock is overbought and likely to pull backThe stock is oversold and may be due for a bounceThe stock has no momentum in either directionThe stock is in a confirmed uptrendRSI below 30 indicates oversold conditions, meaning the price has fallen too far, too fast, and may be due for a bounce. RSI above 70 indicates overbought conditions. An RSI of 25 is deep in oversold territory. Check answers Retake quiz Back to lesson Next lesson →