Reading-56 Technical Analysis LOS: 56.e


I came across the below question on the qbank and I think their answer is incorrect as per the circulum definatiion. Can someone recheck if my understanding is correct?

Q: Which of the following would a technical analyst most likely interpret as a “buy signal”?
a) 10-day moving average crsses above a 60-day moving average.
b) 20-day moving average crosses below a 100-day moving average.
30-day moving average crsses above 5-day moving average.

The answer should be “b” as per the definiation but the qbank says “a”.

Thanks very much.

Why do you think the answer should be B? I thought that technical analysis was always looking for a breakout to the upside, so anything crossing below a moving average is going to mean it is heading lower.

Perhaps it’s the ambiguous wording: does “crosses above” mean “crosses from above (to below)” or “crosses to above (from below)”?

Even if you think that it’s not ambiguous:

  • Others might
  • It would be trivial to change the question to remove any possibility of ambiguity
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Thanks for the explaination. But I am still confused as the book gives this defination: “When a short- term moving average (ie 1 month)
crosses from underneath a longer- term average (ie 3 months), this movement is considered bullish and is termed a golden cross. Conversely, when a short- term moving average crosses from above a longer- term moving average, this movement is considered bearish and is called a death cross.”