STA DIPLOMA LEVEL 2 EXAMINATION - QUESTION PAPER APRIL 2015

ANSWER PART ONE, AND ONE QUESTION FROM PART TWO, AND TWO QUESTIONS FROM PART THREE.
To pass the exam, a minimum mark of 35/60 for the compulsory QUESTION 1 is required, as well as 60/100
for the paper overall. TIME ALLOWED: 3 HOURS. Please try to start each answer on a fresh sheet of paper.

PART ONE - QUESTION 1: Compulsory (Pass mark 35 points, maximum 60 points)

A client has requested a technical report on the index and the share shown in your Question 1 chart pack.
You are asked to provide long-, medium- and short-term analysis and forecasts on both index and share,
followed by suitable investment/trading strategies for the share only, also in all three time frames.

 Use charts 1, 2 and 3 in the chart pack for analysis of the index. Choose from charts 4 to 12 for analysis
of the share. (Using all seven of these might lead to a lack of clarity, but it would be wise to use at least four
to demonstrate a good range of charting skills).
 Chart annotations will be of major importance in this report. (Marks are awarded for these). Trend lines
should be correctly placed and carefully drawn, and patterns, Elliott waves, candle lines etc. clearly labelled.
 The written report will be a two-part report. In the first part, dealing with the index, you provide long-,
medium- and short-term analysis and opinions (including price targets), but you do not need to give buy or
sell recommendations. In the second part, dealing with the share, you also provide long-, medium- and
short-term analysis and opinions (including price targets) and then you also give investment and trading
strategies for the share - i.e. here you add buy or sell recommendations. With regard to your long/medium-
term investment strategies, you should include a comment on what would cause you to change your advice.
In the case of trading strategies for short-term traders, you must suggest appropriate levels for stop losses.
 Ideally, you will also offer a comment on the share’s likely future performance relative to the index.

PART TWO: Answer only ONE question from this section (Maximum 20 points)
2) A financial journalist has published an article claiming that forecasts made by technical analysts 'work'
only because they tend to be 'self-fulfilling prophecies' (self-fulfilling predictions). You are invited to write a
short article in response.
3) R.N. Elliott claimed that he had discovered 'a much needed complement to Dow Theory'. Was he right?
4) As chief technical analyst on a trading floor, you are asked to design a trading system based on your
preferred technical analysis techniques. Explain how you decide on entry and exit points, including stops.
Point out any possible weaknesses in your system.

PART THREE: Answer only TWO questions from this section (Maximum 10 points per question)
5) Choose TWO sentiment indicators and explain how they work.
6) Draw an illustration, or illustrations, of the following four cycle features: wavelength, amplitude, phase,
translation, and explain the reason for translation.
7) Traditional chart pattern analysis can be subjective to some extent, as it relies on the analyst's
interpretative skills. Briefly describe TWO techniques that could be used to add objectivity.
8) Draw a diagram of the typical bonds/stocks/commodities cycle. Why is it important for technicians to
analyse all three asset classes?
9) A. Explain the difference between arithmetic and semi-logarithmic charts. B. For which asset class, and in
which time frames, should each be used, in your view? C. What advantages would you say a 'log' chart has?
10) Standard deviation is the basis for two well-known techniques: A. Bollinger Bands and B. Market Profile®.
Choose ONE of these techniques and describe how it makes use of this statistical measure.
 CHARTS FOR APRIL 2015 EXAMINATION

The following are for use in answering Question 1:

Chart 1 INDEX Monthly candle chart.

Chart 2 INDEX Weekly bar chart with 10- and 40-week simple moving averages; 14-
week RSI; weekly MACD.

Chart 3 INDEX Daily bar chart with 20-day and 50-day simple moving averages; daily
candles; 14-day RSI.

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Chart 4 SHARE Monthly bar chart (logarithmic scale) with 12-month exponential moving
average; volume; monthly MACD.

Chart 5 SHARE Weekly bar chart with 10- and 40-week simple moving averages; relative
performance; weekly stochastics.

Chart 6 SHARE Weekly Ichimoku chart.

Chart 7 SHARE Daily point & figure chart (3-box reversal).

Chart 8 SHARE Daily bar chart with 50- and 200-day simple moving averages; directional
movement.

Chart 9 SHARE Daily bar chart; stochastics (slow); relative performance.

Chart 10 SHARE Daily bar chart with Gann angles and retracements.

Chart 11 SHARE Daily bar chart with Bollinger Bands; 14-day RSI.

Chart 12 SHARE Daily bar chart with 20-, 50- and 200-day simple moving averages; ATR
(Average True Range); Chaikin Money Flow.

 
   

©The Society of Technical Analysts Limited 2015

   

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 1 Index

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 2 Index

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 3 Index

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 4 Share

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 5 Share

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 6 Share

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 7 Share

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 8 Share

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 9 Share

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 10 Share

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 11 Share

©The Society of Technical Analysts Limited 2015

STA Diploma Level 2 Examination
April 2015 Candidate Number: Chart 12 Share

©The Society of Technical Analysts Limited 2015