FIN5004 Financial Trading 2023
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DIPLOMA PROGRAMMES
WRITTEN ASSESSMENT (MAIN)
Date: 28 February 2023
Module: FIN5004 Financial Trading
Time: 14:15 - 16:15
Duration: 2 hours
SECTION A
Answer ALL questions.
Question 1
Chart Pattern
(a) With the help of a clearly labelled price and volume diagram, describe a Head & Shoulders pattern. Include the divergence and expected price objective when the pattern is fully formed. (5 marks)
(b) List FOUR (4) characteristics of the above pattern. (8 marks)
Candlestick Patterns
(c) Name the candlestick pattern above. Indicate if this is a bullish/bearish and continuation/reversal pattern. What is the expected outcome of the trend after this pattern has been observed? (2 marks)
(d) Give FIVE (5) characteristics of the pattern described in Question 1(c). (10 marks)
Question 2
Moving Averages
(a) Calculate the moving averages of Gold:
(i) 5-day Simple Moving Average (SMA). (3 marks)
(ii) 5-day Weighted Moving Average (WMA). (6 marks)
(iii) 5-day Exponential Moving Average (EMA). (4 marks)
Note: Give answers in the above table to ONE (1) decimal place. Show all workings and steps in the answer booklet.
(b) Elaborate the implications of increasing the number of periods of a moving average line, e.g. from 10-day SMA to 100-day SMA. (2 marks)
Bollinger Bands
(c) Refer to A in the chart above. Using the available indicators on the chart, i.e. Bollinger Bands, Stochastics and support & resistance lines, justify how you would derive at a SELL decision - give your thought process. (SELL is the correct decision) (4 marks)
(d) Using the same thought process in part (c) above, which ONE (1) of the entries point - points A, B, C, D or E - are least correct? Explain. (2 marks)
(e) Refer to F, where the candlestick has broken below the lower Bollinger Band. When this is observed, what is the expected behaviour of the price, and what should you do? Elaborate. (2 marks)
(f) Refer to G. Why is G a correct SELL decision? Justify. (1 mark)
(g) Refer to J. What signals to you that the move has likely ended? (1 mark)
SECTION B
Answer ALL questions.
Write your index number and seat numbers and all answers on the charts in Appendix A. Appendix A is to be attached to and submitted with your answer booklets. DO NOT write your name in Appendix A.
Question 3
(a) With the help of suitable annotations and lines, indicate the market trends on the chart for the period Jan 2018 to Mar 2022. (2 marks)
(b) From Sep 2020 to Jun 2021, indicate with suitable annotations and lines, the chart pattern that was formed. Name the pattern and elaborate on the outcome of the price when the pattern is fully formed. Give THREE (3) characteristics of this pattern. (8 marks)
(c) With the help of suitable annotations and arrows, indicate ONE (1) Bullish
Divergence signal on the chart between Sep 2020 and Jan 2022. (2 marks)
(d) Reference to the high (0.30) and low (0.078) prices given on the chart. Calculate the FOUR (4) Fibonacci Retracement levels to two decimal places and indicate the price levels and the respective percentages on the chart. Show all workings on the chart. (8 marks)
(e) From Jun 2020 to the end of the chart, indicate with suitable annotations and lines the reversal pattern that was formed (hint: look for ‘bigger’ pattern). Name the pattern and include the expected price objective ($) when the pattern is fully formed. (5 marks)
Question 4
(a) With the help of suitable annotations and lines, indicate the market trends on the chart for the following periods:
(i) From the beginning of the chart to Sep 2020, identify a trend channel.
(ii) Jun 2020 to the end of the chart. (4 marks)
(b) From Feb 2020 to Mar 2020, a BUY signal was generated by the stochastic indicator (marked BUY). Explain why the BUY signal is permitted when the %K and %D lines are above the 20-level. (2 marks)
(c) With reference to the rectangle marked R in the chart, from Nov 2020 to Mar 2021, indicate with suitable annotations and lines the chart pattern that has formed. (2 marks)
(d) Refer to A, B and C on Chart 4. Calculate the Fibonacci Expansion Ratios and apply the levels on the chart. Show all workings on the chart. (6 marks)
(e) Reference to the 2-candlestick pattern marked ‘P ’ on the chart. Name the pattern and elaborate on the expected outcome of this pattern. Give FOUR (4) characteristics of this pattern. (9 marks)
(f) With the help of suitable annotations and arrows, indicate ONE (1) Bearish Divergence signal on the chart from Apr 2022 to the end of the chart. You may use either indicator provided. (2 marks)
2023-08-16