Interleaved — Phase 3

Stock-Market interleaved practice

printable — key stays hidden on paper

Instructions: Solve each problem in order. Do NOT assume consecutive problems share a topic — identify the correct concept or method for each before answering. Show your reasoning. Total: 50 marks.

1. A daily candle has these values: Open = $102$ , High = $110$ , Low = $101$ , Close = $103$ . Compute (a) the real body size, (b) the upper wick length, and (c) the lower wick length. State whether the candle is bullish or bearish. (5 marks)

2. Over four sessions a stock prints these swing points in order: Low $50$ → High $58$ → Low $54$ → High $63$ → Low $57$ → High $69$ . Classify the trend using higher-high / higher-low logic, and name which primary/secondary/minor category a single 2-day pullback within this move would fall under. (5 marks)

3. A candle has Open = $80$ , Close = $80.2$ , High = $88$ , Low = $79.5$ . Identify the single-candle pattern by name and state what it typically signals if it appears after an extended uptrend. (5 marks)

4. On a log price scale, a move from $\$ 10 $to$ $20 $and a move from$ $50 $to$ $100$ appear as equal vertical distances. Explain why, and compute the percentage change each move represents to justify it. (4 marks)

5. Day 1 is a bearish candle: Open = $100$ , Close = $95$ . Day 2 is bullish: Open = $94$ , Close = $101$ . Identify the two-candle pattern and state the required body relationship that confirms it. (5 marks)

6. State the three core Dow Theory tenets that concern (i) what the averages reflect, (ii) trend confirmation between two averages, and (iii) how a trend is presumed to continue. (5 marks)

7. A trader draws a rising trendline connecting successive swing lows at $\$ 40, $44, $48$ over 3 equally-spaced sessions. Assuming the line continues linearly, project the trendline's support value at the 5th such session. (4 marks)

8. A breakout above resistance occurs. In session A volume is $3\times$ the 20-day average; in session B volume is $0.4\times$ average. Which breakout is more reliable and why? Name the concept being applied. (4 marks)

9. Two small-bodied candles appear consecutively at the top of an uptrend. Both share nearly identical HIGH prices but different bodies. Identify the reversal pattern and state whether it is bullish or bearish. (4 marks)

10. A three-candle sequence at a bottom: (i) long bearish candle, (ii) small-bodied candle gapping down with tiny body, (iii) long bullish candle closing well into the first candle's body. Name the pattern, its bias, and contrast it with the two-candle harami in terms of candle count. (5 marks)

Answer keyMark scheme & solutions

Problem 1 — Tests 3.2.1 (candlestick anatomy) + 3.1.2 (OHLC).

Body = |Close − Open| = |103 − 102| = $1$
Upper wick = High − max(Open,Close) = 110 − 103 = $7$
Lower wick = min(Open,Close) − Low = 102 − 101 = $1$
Close (103) > Open (102) → bullish. Why: Numbers alone don't tell you the method — you must recognize this asks for anatomy decomposition from raw OHLC, not a pattern name.

Problem 2 — Tests 3.1.7 (HH/HL) + 3.1.5 (primary/secondary/minor trends).

Highs: 58 → 63 → 69 (rising = higher highs). Lows: 50 → 54 → 57 (rising = higher lows).
Both rising → uptrend.
A brief 2-day pullback against this move = a minor trend (minor = days/short-lived; secondary = weeks corrective; primary = the main uptrend itself). Why: Interleaves swing logic with the trend-timescale taxonomy — easy to answer only the first half.

Problem 3 — Tests 3.2.4 (shooting star) vs 3.2.3 (hanging man).

Body = |80.2 − 80| = 0.2 (tiny). Upper wick = 88 − 80.2 = 7.8 (long). Lower wick = 80 − 79.5 = 0.5 (small).
Long upper shadow, small body near the low, short lower shadow → Shooting Star.
After an uptrend it signals a bearish reversal. Why: Long-upper-wick-after-uptrend distinguishes shooting star from hammer (long lower wick). Method choice = wick location.

Problem 4 — Tests 3.1.10 (log vs linear scales).

Log scale plots equal percentage changes as equal distances.
$10\to20$ : $(20-10)/10 = 100\%$ . $50\to100$ : $(100-50)/50 = 100\%$ .
Both are $+100\%$ , so on a log scale they occupy equal vertical space (whereas on linear the $\$ 50$ move would look 5× larger). Why: Requires percentage computation to justify, not just state.

Problem 5 — Tests 3.2.5 (bullish engulfing).

Day 1 bearish (100→95), Day 2 bullish (94→101).
Day 2's body (94–101) fully engulfs Day 1's body (95–100) → Bullish Engulfing.
Required: Day 2 opens ≤ Day 1 close and closes ≥ Day 1 open (body-2 contains body-1). Why: Contrast with piercing line (which only pierces >50%, not full engulf).

Problem 6 — Tests 3.1.4 (Dow Theory tenets).

(i) The averages discount everything — prices reflect all known information.
(ii) The averages must confirm each other — a trend is valid only when both indices (e.g., Industrials & Transports) move together.
(iii) A trend is assumed to continue until a definitive reversal signal appears. Why: Pure recall interleaved among computation problems to break pattern-matching habits.

Problem 7 — Tests 3.1.8 (trendlines and channels).

Slope = (44−40)/1 = $4$ per session (linear: 40, 44, 48 confirms +4/session).
Value at session 5 = 40 + 4×(5−1) = 40 + 16 = $\$ 56$. Why: Linear extrapolation of a support line; distinguishes from log scaling in Q4.

Problem 8 — Tests 3.1.9 (volume confirmation).

Session A (3× average) is more reliable — breakouts need above-average volume to confirm conviction; low-volume breakouts (B) are prone to failure/false breaks.
Concept: volume confirmation. Why: No arithmetic answer; tests the confirmation principle.

Problem 9 — Tests 3.2.11 (tweezer tops).

Two candles with matching highs at the top of an uptrend → Tweezer Top.
Bearish reversal. Why: Matching highs at a top = tweezer top; matching lows at bottom would be bullish tweezer bottom.

Problem 10 — Tests 3.2.7 (morning star) + 3.2.9 (harami comparison).

Pattern: Morning Star — bearish candle, small "star" gapping down, then strong bullish candle closing into candle-1's body.
Bias: bullish reversal.
Contrast: Morning star = 3 candles; harami = 2 candles (small body inside prior large body). Why: Both are reversals but differ in candle count — the interleave forces distinguishing star patterns from harami.

[
  {"claim":"Q1 body=1, upper wick=7, lower wick=1",
   "code":"O,H,L,C=102,110,101,103\nbody=abs(C-O)\nup=H-max(O,C)\nlow=min(O,C)-L\nresult=(body==1 and up==7 and low==1)"},
  {"claim":"Q4 both moves are +100% so equal on log scale",
   "code":"a=(20-10)/10*100\nb=(100-50)/50*100\nresult=(a==b==100)"},
  {"claim":"Q7 trendline projects to 56 at session 5",
   "code":"slope=(44-40)/1\nval=40+slope*(5-1)\nresult=(val==56)"}
]