Unlock Your Market Wizardry: Conquer the 2025 Chartered Market Technician (CMT) Test!

A minor high in market analysis is defined as a local peak that occurs in a price series and is typically characterized by price movements following specific intervals related to higher highs. The correct choice outlines that a minor high must be separated by five days from the next higher high.

The rationale behind this timeframe is that it allows for a clearer identification of the peak, distinguishing it from transient price movements that may not signify a true reversal in the trend. By requiring a separation of five days, analysts ensure that the peak is not merely a fluctuation but instead represents a significant relative maximum in the context of price action.

This concept fosters a consistent approach in technical analysis, where identifying minor highs is essential for constructing potential trading strategies and understanding market dynamics. A minor high can indicate potential selling opportunities if followed by a subsequent decline, or it may serve as a basis for analyzing market corrections and overall trend strength if it holds and maintains a structural position over time.