CMT Level 2 Practice Test 2025 – Complete Exam Prep

A positive directional movement day is defined as a day where today's high price exceeds the previous day's high price. This concept is rooted in technical analysis, particularly in the context of the Average Directional Index (ADX) and the Directional Movement Index (DMI). When the high of the current day surpasses the previous day's high, it indicates strong upward momentum and buying interest in the market, signaling potential bullish sentiment.

In contrast, days characterized by a closing price higher than the previous day's, while positive, do not necessarily capture the intraday price movement dynamics that the positive directional movement metric focuses on. The other choices, such as an increase in trading volume or a day with no significant price movement, do not adequately demonstrate the specific upward price action that defines a positive directional movement day. Clear upward price movement is what makes the characterization of such a day valid and significant in technical analysis.