Canadian Securities Course (CSC) Level 2 Practice Exam

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Prepare for the Canadian Securities Course Level 2 Exam with our comprehensive quiz. Assess your knowledge with multiple choice questions designed to test your understanding of the Canadian securities industry. Get the insights you need to achieve success!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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What is the main purpose of the Head and Shoulders pattern in technical analysis?

To predict a change from an uptrend to a downtrend
To indicate a continuation of the current trend
To identify a strong support level
To signal a short-term price fluctuation

The correct answer is: To predict a change from an uptrend to a downtrend

The main purpose of the Head and Shoulders pattern in technical analysis is to predict a change from an uptrend to a downtrend. This pattern is formed when a security's price movement creates a baseline (the "shoulders") with higher peaks in between (the "head"). The completion of this pattern typically signals a trend reversal, indicating that the security's price is likely to move from an uptrend to a downtrend. This makes option A the correct choice. On the other hand, options B, C, and D are incorrect because the Head and Shoulders pattern is not used to indicate a continuation of the current trend, identify a strong support level, or signal a short-term price fluctuation.