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What is the primary function of the Moving Average Convergence Divergence (MACD) indicator?

To identify overbought and oversold levels in the market

To measure the volatility of a stock

To track the convergence and divergence of two moving averages

To predict future price movements with high accuracy

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How is the MACD line calculated?

By adding the 12-day EMA and the 26-day EMA

By subtracting the 26-day EMA from the 12-day EMA

By multiplying the 12-day EMA by the 26-day EMA

By dividing the 12-day EMA by the 26-day EMA

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What does a positive MACD value indicate?

The stock price is trending downwards

The stock price is trending upwards

The stock price is consolidating

The stock price is about to reverse direction

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What is the purpose of the signal line in the MACD indicator?

To act as a support level for the MACD line

To act as a resistance level for the MACD line

To generate crossover signals for buy and sell opportunities

To smooth out the fluctuations in the MACD line

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What are the three components of Bollinger Bands (BB)?

10-day SMA, +2 SD, -2 SD

20-day SMA, +2 SD, -2 SD

50-day SMA, +2 SD, -2 SD

200-day SMA, +2 SD, -2 SD

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How are Bollinger Bands used to identify trading opportunities?

By looking for crossovers between the upper band and the lower band

By looking for breakouts above the upper band or below the lower band

By looking for the price to touch the upper band as a sell signal and the lower band as a buy signal

By looking for the price to move away from the bands as a signal of a strong trend

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In which type of market do Bollinger Bands work best?

A trending market

A sideways market

A volatile market

A low-volume market

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What is the recommended approach to using technical indicators in trading?

Rely solely on indicators for making trading decisions

Use indicators as the primary tool for analysis

Use indicators to confirm trading decisions based on other factors

Ignore indicators completely as they are unreliable