Ifta Cfteii Mock Exam

CFTeII
Examination Question Paper - Mock Examination

TIME ALLOWED: 3 HOURS

SECTION ONE (Question 1): ANSWER BOTH PART A AND B; SECTION TWO (Questions 2-7): ANSWER TWO
QUESTIONS FROM EACH OF THE SIX QUESTIONS. To pass the exam, a minimum mark of 25/40 for Section One,
Question 1 is required, as well as 60/100 for the paper overall.

SECTION ONE - Question 1: Part A and Part B
Minimum Pass mark 25 points, maximum 40 points (Part A: 25; Part B: 15)

Question 1. Part A (Note: Chart annotations are a very important part of your analysis. Trend lines, Pattern etc.
should be carefully drawn and labelled.)
Charts 1 through 7 belong to S&P 500 Composite Index.

1. Analyze the market from a long-term, intermediate-term and short-term perspective. Your analysis should
include the following:
o Trends from different time dimensions, support/resistance levels, signs of weakness/strength, as well as
important signals that appear on the chart.
o Your expectation for the future direction of the market for the major, intermediate, and minor pictures.
Your answer should include all supporting evidences.
o Your recommendation for your clients, both long-term and short-term clients. Please recommend a
trading tactic and money management technique for both, a long-term and a short-term client; indicate
for each client, whether his current position is long, short or flat before explaining your
recommendations.

Part B: (Note: Please keep in mind, that there is not one single, absolute, correct answer when reallocating
the weight percentages of the underlyings. Marks will be awarded for your clear argumentation.)
2. An investor has the following weights in his portfolio:

o S&P 500 (Equity): 30%
o Gold: 10%
o Oil: 40%
o T-Note: 20%
Based on charts 8 through 13 and their indicators, what do you recommend the investor to do? Your answers
should include the following:
o A brief analysis on these different markets (S&P, Gold, Oil, T-Note)

o An explanation of what markets should be over weighted, and what markets should be underweighted.
You must finally propose a new allocation weight (Percentage) for each asset and clearly explain the
reasons for your reallocations.
Important Note: All indicators are calculated on the RS curves not on the real prices
* Please start each answer on a fresh sheet of paper

The International Federation of Technical Analysts 2014

CFTeII Examination Question Paper - Mock Examination

SECTION TWO Questions 2-7
Maximum 60 points (5 points for each question)
Answer TWO questions from each question (2-7)
Question 2. (ANSWER TWO QUESTIONS)
1- Despite that the ascending triangle has one rising line, and another horizontal line, while the rising
wedge has both lines rising, the ascending triangle is a bullish formation, while the rising wedge is a
bearish formation. Explain. Your answer should include an explanation of how demand and supply
interact in each of these formations.
2- Explain a trading tactic for buying and selling using the three moving averages technique.
3- A hammer formation is more bullish than an inverted hammer, while a shooting star is more bearish
than a hanging man. Explain.
1- Explain briefly the three phases of a major uptrend based on Dow Theory
2- Explain how to obtain a target on a log scale Point and Figure chart.
3- What are the three properties of cycles? Support your answer with a diagram. (Assume that the cycles
are simple sine waves)
1- Explain the Random Walk Theory. Your answer should include the principals of the theory and the
criticisms
2- Address volume as it relates to
o prices that are rising
o Prices that are falling
Include in your answer advances and declines that halt on high volumes
3- As used during developments of trading systems, explain the terms in-sample and out-of-sample.


CFTeII Examination Question Paper - Mock Examination

1- Based on Prings Technical Analysis Explained, explain the concept of Group Rotation, showing
leading and lagging groups during a typical business cycle.
2- What is the difference between the Basic Number based on projection and the Time Parity
projection in Ichimoku charting technique.
3- Explain the concept of Relative Strength and its main uses. Note that this is not the RSI oscillator
1- Explain the calculation of the +DM and DM components of the ADX. Your answer should include all
scenarios for +DM and DM calculations. Note: you are only requested to explain the calculation of these
two components, not the whole indicator.
2- Market Profile charts look like bell curves (normal distribution) on their sides. Explain the value of using
standard deviations on Market Profile charts and what is its significance to the trader?
3- When drawing a kagi chart, a turnaround amount (the minimum price movement needed before a new
reversal line can be drawn in the next column) must be chosen. What is the problem in using a fixed price
amount as opposed to a fixed percentage amount to recognize a reversal when drawing a kagi chart?
1- The guideline alternation in the Elliott Wave Principle suggests that the analyst should prepare himself
not with what to expect, but with what not to expect in terms of prices action. Explain the guideline of
alternation and identify the two cases in which this guideline is addressed. Support your answer with a
diagram.
2- Explain from a time cycles analysis perspective what is meant by a centered (simple) moving average?
3- In their book Technical Analysis, the complete resource for financial market technicians, Kirkpatrick
and Dahlquist mentioned the following: Indicators using breadth differences are calculated as the net of
advances minus declines, either with the resulting sign or with an absolute number. The primary problem
with using breadth differences is that..
Briefly explain the primary problem with using breadth differences, and name three indicators that fall into
this category.


CFTe II - Mock Examination
The International Federation of Technical Analysts
CHART 1. Yearly Chart: log scale

2000

CHART 2: Monthly Chart: log scale; Moving Averages: 20 and 50 EMA; MACD (12,26,9); RSI (14)

CHART 3: Monthly Chart: arithmetic scale; Moving Averages: 20 and 50 EMA; Slow Stochastic Oscillator (9,5,3); ADX (dotted
line), +DI, and -DI

+DI
-DI
CHART 4: Weekly Chart: Arithmetic scale; Moving Averages: 50 EMA; CCI (20); Momentum (14)

CHART 5: Weekly Chart: Arithmetic scale; Bollinger Bands: (20 SMA with 2 S.D.); MACD Histogram; Williams % R: (10)

CHART 6: Daily Chart: Arithmetic scale; Moving Averages; 50 EMA, MACD (12,26, 9) +DI, -DI (dotted line)

CHART 7: Daily candlesticks chart: Arithmetic scale; Moving Averages: 10,20 SMA; Slow Stochastic Oscillator (9,5,3); RSI (14)

CHART 8:
Upper Window: S&P 500 Index Weekly Candlestick Chart Normal Scale
Middle Window: S&P 500 Index vs. 10-Year UST-Note RS line w/Bollinger Bands (20 Week SMA/2 Stdev.) Normal Scale
Lower Window: Relative Strength Index (RSI) of the S&P 500 Index vs. 10-Year UST-Note RS line Normal Scale

CHART 9: S&P 500 Index

Middle Window: S&P 500 Index vs. Brent Spot RS line w/Bollinger Bands (20 Week SMA/2 Stdev.) Normal Scale
Lower Window: Relative Strength Index (RSI) of the S&P 500 Index vs. Brent Spot RS line Normal Scale
CHART 10: S&P 500 Index

Middle Window: S&P 500 Index vs. Gold RS line Normal Scale
Lower Window: MACD of the S&P 500 Index vs. Gold RS line Normal Scale
CHART 11: Gold

Upper Window: Gold - Weekly Candlestick - Normal Scale
Middle Window: Gold vs. Brent spot RS line w/26 Week SMA Normal Scale
Lower Window: MACD of the Gold vs. Brent Sport RS Line Normal Scale
CHART 12: 10-Year UST-Note

Upper Window: 10-Year UST-Note Weekly Candlestick Chart Normal Scale
Lower Window: 10-Year UST-Note vs. Gold RS line w/Bollinger Bands (20 Week SMA/2 Stdev.) Normal Scale
CHART 13: Brent Spot

Upper Window: Brent Spot Weekly Candlestick Chart Normal Scale
Lower Window: Brent Spot vs. 10-Year UST-Note RS line w/26 Week SMA Normal Scale

Ifta Cfteii Mock Exam

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CFTeII

Examination Question Paper - Mock Examination

Charts 1 through 7 belong to S&P 500 Composite Index.

2. An investor has the following weights in his portfolio:

o A brief analysis on these different markets (S&P, Gold, Oil, T-Note)

* Please start each answer on a fresh sheet of paper

Maximum 60 points (5 points for each question)

Answer TWO questions from each question (2-7)

Question 2. (ANSWER TWO QUESTIONS)

Question 3. (ANSWER TWO QUESTIONS)

Question 4. (ANSWER TWO QUESTIONS)

* Please start each answer on a fresh sheet of paper

Question 6. (ANSWER TWO QUESTIONS)

Question 7. (ANSWER TWO QUESTIONS)

* Please start each answer on a fresh sheet of paper

CHART 1. Yearly Chart: log scale

CHART 9: S&P 500 Index

CHART 10: S&P 500 Index

CHART 11: Gold

CHART 12: 10-Year UST-Note

CHART 13: Brent Spot

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