Technical analysis - Wikipedia

In finance, technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and ... Technicalanalysis FromWikipedia,thefreeencyclopedia Jumptonavigation Jumptosearch Securityanalysismethodology Infinance,technicalanalysisisananalysismethodologyforforecastingthedirectionofpricesthroughthestudyofpastmarketdata,primarilypriceandvolume.[1]Behavioraleconomicsandquantitativeanalysisusemanyofthesametoolsoftechnicalanalysis,[2][3][4]which,beinganaspectofactivemanagement,standsincontradictiontomuchofmodernportfoliotheory.Theefficacyofbothtechnicalandfundamentalanalysisisdisputedbytheefficient-markethypothesis,whichstatesthatstockmarketpricesareessentiallyunpredictable,[5]andresearchonwhethertechnicalanalysisoffersanybenefithasproducedmixedresults.[6][7][8] Contents 1History 2Generaldescription 3Characteristics 4Principles 4.1Marketactiondiscountseverything 4.2Pricesmoveintrends 4.3Historytendstorepeatitself 5Industry 5.1Software 6Systematictrading 6.1Neuralnetworks 6.2Backtesting 7Combinationwithothermarketforecastmethods 8Empiricalevidence 8.1Efficient-markethypothesis 8.1.1Randomwalkhypothesis 9Scientifictechnicalanalysis 10Ticker-tapereading 11Quotationboard 12Chartingtermsandindicators 12.1Concepts 12.2Typesofcharts 12.3Overlays 12.4Breadthindicators 12.5Price-basedindicators 12.6Volume-basedindicators 12.7TradingwithMixingIndicators 13Seealso 14References 15Bibliography 16Furtherreading 17Externallinks History[edit] Theprinciplesoftechnicalanalysisarederivedfromhundredsofyearsoffinancialmarketdata.[9]SomeaspectsoftechnicalanalysisbegantoappearinAmsterdam-basedmerchantJosephdelaVega'saccountsoftheDutchfinancialmarketsinthe17thcentury.InAsia,technicalanalysisissaidtobeamethoddevelopedbyHommaMunehisaduringtheearly18thcenturywhichevolvedintotheuseofcandlesticktechniques,andistodayatechnicalanalysischartingtool.[10][11] JournalistCharlesDow(1851-1902)compiledandcloselyanalyzedAmericanstockmarketdata,andpublishedsomeofhisconclusionsineditorialsforTheWallStreetJournal.Hebelievedpatternsandbusinesscyclescouldpossiblybefoundinthisdata,aconceptlaterknownas"Dowtheory".However,Dowhimselfneveradvocatedusinghisideasasastocktradingstrategy. Inthe1920sand1930s,RichardW.SchabackerpublishedseveralbookswhichcontinuedtheworkofCharlesDowandWilliamPeterHamiltonintheirbooksStockMarketTheoryandPracticeandTechnicalMarketAnalysis.In1948,RobertD.EdwardsandJohnMageepublishedTechnicalAnalysisofStockTrendswhichiswidelyconsideredtobeoneoftheseminalworksofthediscipline.Itisexclusivelyconcernedwithtrendanalysisandchartpatternsandremainsinusetothepresent.Earlytechnicalanalysiswasalmostexclusivelytheanalysisofchartsbecausetheprocessingpowerofcomputerswasnotavailableforthemoderndegreeofstatisticalanalysis.CharlesDowreportedlyoriginatedaformofpointandfigurechartanalysis.Withtheemergenceofbehavioralfinanceasaseparatedisciplineineconomics,PaulV.Azzopardicombinedtechnicalanalysiswithbehavioralfinanceandcoinedtheterm"BehavioralTechnicalAnalysis".[12] OtherpioneersofanalysistechniquesincludeRalphNelsonElliott,WilliamDelbertGann,andRichardWyckoffwhodevelopedtheirrespectivetechniquesintheearly20thcentury.Moretechnicaltoolsandtheorieshavebeendevelopedandenhancedinrecentdecades,withanincreasingemphasisoncomputer-assistedtechniquesusingspeciallydesignedcomputersoftware. Generaldescription[edit] Fundamentalanalystsexamineearnings,dividends,assets,quality,ratio,newproducts,researchandthelike.Techniciansemploymanymethods,toolsandtechniquesaswell,oneofwhichistheuseofcharts.Usingcharts,technicalanalystsseektoidentifypricepatternsandmarkettrendsinfinancialmarketsandattempttoexploitthosepatterns.[13] Techniciansusingchartssearchforarchetypalpricechartpatterns,suchasthewell-knownheadandshoulders[14]ordoubletop/bottomreversalpatterns,studytechnicalindicators,movingaveragesandlookforformssuchaslinesofsupport,resistance,channelsandmoreobscureformationssuchasflags,pennants,balancedaysandcupandhandlepatterns.[15] Technicalanalystsalsowidelyusemarketindicatorsofmanysorts,someofwhicharemathematicaltransformationsofprice,oftenincludingupanddownvolume,advance/declinedataandotherinputs.Theseindicatorsareusedtohelpassesswhetheranassetistrending,andifitis,theprobabilityofitsdirectionandofcontinuation.Techniciansalsolookforrelationshipsbetweenprice/volumeindicesandmarketindicators.Examplesincludethemovingaverage,relativestrengthindexandMACD.OtheravenuesofstudyincludecorrelationsbetweenchangesinOptions(impliedvolatility)andput/callratioswithprice.AlsoimportantaresentimentindicatorssuchasPut/Callratios,bull/bearratios,shortinterest,ImpliedVolatility,etc. Therearemanytechniquesintechnicalanalysis.Adherentsofdifferenttechniques(forexample:Candlestickanalysis,theoldestformoftechnicalanalysisdevelopedbyaJapanesegraintrader;Harmonics;Dowtheory;andElliottwavetheory)mayignoretheotherapproaches,yetmanytraderscombineelementsfrommorethanonetechnique.Sometechnicalanalystsusesubjectivejudgmenttodecidewhichpattern(s)aparticularinstrumentreflectsatagiventimeandwhattheinterpretationofthatpatternshouldbe.Othersemployastrictlymechanicalorsystematicapproachtopatternidentificationandinterpretation. Contrastingwithtechnicalanalysisisfundamentalanalysis,thestudyofeconomicfactorsthatinfluencethewayinvestorspricefinancialmarkets.Technicalanalysisholdsthatpricesalreadyreflectalltheunderlyingfundamentalfactors.Uncoveringthetrendsiswhattechnicalindicatorsaredesignedtodo,althoughneithertechnicalnorfundamentalindicatorsareperfect.Sometradersusetechnicalorfundamentalanalysisexclusively,whileothersusebothtypestomaketradingdecisions.[16] Characteristics[edit] Thissectionneedstobeupdated.Pleasehelpupdatethisarticletoreflectrecenteventsornewlyavailableinformation.(June2021) Technicalanalysisemploysmodelsandtradingrulesbasedonpriceandvolumetransformations,suchastherelativestrengthindex,movingaverages,regressions,inter-marketandintra-marketpricecorrelations,businesscycles,stockmarketcyclesor,classically,throughrecognitionofchartpatterns. Technicalanalysisstandsincontrasttothefundamentalanalysisapproachtosecurityandstockanalysis.InthefundamentalequationM=P/EtechnicalanalysisistheexaminationofM(multiple).Multipleencompassesthepsychologygenerallyabounding,i.e.theextentofwillingnesstobuy/sell.AlsoinMistheabilitytopayas,forinstance,aspent-outbullcan'tmakethemarketgohigherandawell-heeledbearwon't.Technicalanalysisanalyzesprice,volume,psychology,moneyflow,andothermarketinformation,whereasfundamentalanalysislooksatthefactsofthecompany,market,currency,orcommodity.Mostlargebrokerages,tradinggroups,orfinancialinstitutionswilltypicallyhavebothatechnicalanalysisandfundamentalanalysisteam. Inthe1960sand1970s,itwaswidelydismissedbyacademics.Ina2007review,IrwinandPark[6]reportedthat56of95modernstudiesfoundthatitproducespositiveresultsbutnotedthatmanyofthepositiveresultswererendereddubiousbyissuessuchasdatasnooping,sothattheevidenceinsupportoftechnicalanalysiswasinconclusive;itisstillconsideredbymanyacademicstobeindistinguishablefrompseudoscience.[17]AcademicssuchasEugeneFamasaytheevidencefortechnicalanalysisissparseandisinconsistentwiththeweakformoftheefficient-markethypothesis.[18][19]Usersholdthateveniftechnicalanalysiscannotpredictthefuture,ithelpstoidentifytrends,tendencies,andtradingopportunities.[20] Whilesomeisolatedstudieshaveindicatedthattechnicaltradingrulesmightleadtoconsistentreturnsintheperiodpriorto1987,[21][7][22][23]mostacademicworkhasfocusedonthenatureoftheanomalouspositionoftheforeignexchangemarket.[24]Itisspeculatedthatthisanomalyisduetocentralbankintervention,whichobviouslytechnicalanalysisisnotdesignedtopredict.[25] Principles[edit] Stockchartshowinglevelsofsupport(4,5,6,7,and8)andresistance(1,2,and3);levelsofresistancetendtobecomelevelsofsupportandviceversa.[citationneeded] Acoreprincipleoftechnicalanalysisisthatamarket'spricereflectsallrelevantinformationimpactingthatmarket.Atechnicalanalystthereforelooksatthehistoryofasecurityorcommodity'stradingpatternratherthanexternaldriverssuchaseconomic,fundamentalandnewsevents.Itisbelievedthatpriceactiontendstorepeatitselfduetothecollective,patternedbehaviorofinvestors.Hencetechnicalanalysisfocusesonidentifiablepricetrendsandconditions.[26][27] Marketactiondiscountseverything[edit] Basedonthepremisethatallrelevantinformationisalreadyreflectedbyprices,technicalanalystsbelieveitisimportanttounderstandwhatinvestorsthinkofthatinformation,knownandperceived. Pricesmoveintrends[edit] Seealso:Markettrend Technicalanalystsbelievethatpricestrenddirectionally,i.e.,up,down,orsideways(flat)orsomecombination.ThebasicdefinitionofapricetrendwasoriginallyputforwardbyDowtheory.[13] AnexampleofasecuritythathadanapparenttrendisAOLfromNovember2001throughAugust2002.Atechnicalanalystortrendfollowerrecognizingthistrendwouldlookforopportunitiestosellthissecurity.AOLconsistentlymovesdownwardinprice.Eachtimethestockrose,sellerswouldenterthemarketandsellthestock;hencethe"zig-zag"movementintheprice.Theseriesof"lowerhighs"and"lowerlows"isatelltalesignofastockinadowntrend.[28]Inotherwords,eachtimethestockmovedlower,itfellbelowitspreviousrelativelowprice.Eachtimethestockmovedhigher,itcouldnotreachthelevelofitspreviousrelativehighprice. NotethatthesequenceoflowerlowsandlowerhighsdidnotbeginuntilAugust.ThenAOLmakesalowpricethatdoesnotpiercetherelativelowsetearlierinthemonth.Laterinthesamemonth,thestockmakesarelativehighequaltothemostrecentrelativehigh.Inthisatechnicianseesstrongindicationsthatthedowntrendisatleastpausingandpossiblyending,andwouldlikelystopactivelysellingthestockatthatpoint. Historytendstorepeatitself[edit] Technicalanalystsbelievethatinvestorscollectivelyrepeatthebehavioroftheinvestorsthatprecededthem.Toatechnician,theemotionsinthemarketmaybeirrational,buttheyexist.Becauseinvestorbehaviorrepeatsitselfsooften,techniciansbelievethatrecognizable(andpredictable)pricepatternswilldeveloponachart.[13]Recognitionofthesepatternscanallowthetechniciantoselecttradesthathaveahigherprobabilityofsuccess.[29] Technicalanalysisisnotlimitedtocharting,butitalwaysconsiderspricetrends.[1]Forexample,manytechniciansmonitorsurveysofinvestorsentiment.Thesesurveysgaugetheattitudeofmarketparticipants,specificallywhethertheyarebearishorbullish.Techniciansusethesesurveystohelpdeterminewhetheratrendwillcontinueorifareversalcoulddevelop;theyaremostlikelytoanticipateachangewhenthesurveysreportextremeinvestorsentiment.[30]Surveysthatshowoverwhelmingbullishness,forexample,areevidencethatanuptrendmayreverse;thepremisebeingthatifmostinvestorsarebullishtheyhavealreadyboughtthemarket(anticipatinghigherprices).Andbecausemostinvestorsarebullishandinvested,oneassumesthatfewbuyersremain.Thisleavesmorepotentialsellersthanbuyers,despitethebullishsentiment.Thissuggeststhatpriceswilltrenddown,andisanexampleofcontrariantrading.[31] Industry[edit] TheindustryisgloballyrepresentedbytheInternationalFederationofTechnicalAnalysts(IFTA),whichisafederationofregionalandnationalorganizations.IntheUnitedStates,theindustryisrepresentedbyboththeCMTAssociationandtheAmericanAssociationofProfessionalTechnicalAnalysts(AAPTA).TheUnitedStatesisalsorepresentedbytheTechnicalSecurityAnalystsAssociationofSanFrancisco(TSAASF).IntheUnitedKingdom,theindustryisrepresentedbytheSocietyofTechnicalAnalysts(STA).TheSTAwasafoundingmemberofIFTA,hasrecentlycelebratedits50thAnniversaryandcertifiesanalystswiththeDiplomainTechnicalAnalysis.InCanadatheindustryisrepresentedbytheCanadianSocietyofTechnicalAnalysts.[32]InAustralia,theindustryisrepresentedbytheAustralianTechnicalAnalystsAssociation(ATAA),[33](whichisaffiliatedtoIFTA)andtheAustralianProfessionalTechnicalAnalysts(APTA)Inc.[34] ProfessionaltechnicalanalysissocietieshaveworkedoncreatingabodyofknowledgethatdescribesthefieldofTechnicalAnalysis.Abodyofknowledgeiscentraltothefieldasawayofdefininghowandwhytechnicalanalysismaywork.Itcanthenbeusedbyacademia,aswellasregulatorybodies,indevelopingproperresearchandstandardsforthefield.TheCMTAssociationhaspublishedabodyofknowledge,whichisthestructurefortheCharteredMarketTechnician(CMT)exam.[35][36] Software[edit] Technicalanalysissoftwareautomatesthecharting,analysisandreportingfunctionsthatsupporttechnicalanalystsintheirreviewandpredictionoffinancialmarkets(e.g.thestockmarket).[citationneeded] Inadditiontoinstallabledesktop-basedsoftwarepackagesinthetraditionalsense,theindustryhasseenanemergenceofcloud-basedapplicationsandapplicationprogramminginterfaces(APIs)thatdelivertechnicalindicators(e.g.,MACD,BollingerBands)viaRESTfulHTTPorintranetprotocols. Moderntechnicalanalysissoftwareisoftenavailableasaweborasmartphoneapplication,withouttheneedtodownloadandinstallasoftwarepackage. Systematictrading[edit] Mainarticle:Systematictrading Neuralnetworks[edit] Sincetheearly1990swhenthefirstpracticallyusabletypesemerged,artificialneuralnetworks(ANNs)haverapidlygrowninpopularity.Theyareartificialintelligenceadaptivesoftwaresystemsthathavebeeninspiredbyhowbiologicalneuralnetworkswork.Theyareusedbecausetheycanlearntodetectcomplexpatternsindata.Inmathematicalterms,theyareuniversalfunctionapproximators,[37][38]meaningthatgiventherightdataandconfiguredcorrectly,theycancaptureandmodelanyinput-outputrelationships.Thisnotonlyremovestheneedforhumaninterpretationofchartsortheseriesofrulesforgeneratingentry/exitsignals,butalsoprovidesabridgetofundamentalanalysis,asthevariablesusedinfundamentalanalysiscanbeusedasinput. AsANNsareessentiallynon-linearstatisticalmodels,theiraccuracyandpredictioncapabilitiescanbebothmathematicallyandempiricallytested.Invariousstudies,authorshaveclaimedthatneuralnetworksusedforgeneratingtradingsignalsgivenvarioustechnicalandfundamentalinputshavesignificantlyoutperformedbuy-holdstrategiesaswellastraditionallineartechnicalanalysismethodswhencombinedwithrule-basedexpertsystems.[39][40][41] Whiletheadvancedmathematicalnatureofsuchadaptivesystemshaskeptneuralnetworksforfinancialanalysismostlywithinacademicresearchcircles,inrecentyearsmoreuserfriendlyneuralnetworksoftwarehasmadethetechnologymoreaccessibletotraders.[citationneeded] Backtesting[edit] Systematictradingismostoftenemployedaftertestinganinvestmentstrategyonhistoricdata.Thisisknownasbacktesting.Backtestingismostoftenperformedfortechnicalindicators,butcanbeappliedtomostinvestmentstrategies(e.g.fundamentalanalysis).Whiletraditionalbacktestingwasdonebyhand,thiswasusuallyonlyperformedonhuman-selectedstocks,andwasthuspronetopriorknowledgeinstockselection.Withtheadventofcomputers,backtestingcanbeperformedonentireexchangesoverdecadesofhistoricdatainveryshortamountsoftime. Theuseofcomputersdoeshaveitsdrawbacks,beinglimitedtoalgorithmsthatacomputercanperform.Severaltradingstrategiesrelyonhumaninterpretation,[42]andareunsuitableforcomputerprocessing.[43]Onlytechnicalindicatorswhichareentirelyalgorithmiccanbeprogrammedforcomputerizedautomatedbacktesting. Combinationwithothermarketforecastmethods[edit] JohnMurphystatesthattheprincipalsourcesofinformationavailabletotechniciansareprice,volumeandopeninterest.[13]Otherdata,suchasindicatorsandsentimentanalysis,areconsideredsecondary. However,manytechnicalanalystsreachoutsidepuretechnicalanalysis,combiningothermarketforecastmethodswiththeirtechnicalwork.OneadvocateforthisapproachisJohnBollinger,whocoinedthetermrationalanalysisinthemiddle1980sfortheintersectionoftechnicalanalysisandfundamentalanalysis.[44]Anothersuchapproach,fusionanalysis,overlaysfundamentalanalysiswithtechnical,inanattempttoimproveportfoliomanagerperformance. Technicalanalysisisalsooftencombinedwithquantitativeanalysisandeconomics.Forexample,neuralnetworksmaybeusedtohelpidentifyintermarketrelationships.[45] Investorandnewsletterpolls,andmagazinecoversentimentindicators,arealsousedbytechnicalanalysts.[46] Empiricalevidence[edit] Whethertechnicalanalysisactuallyworksisamatterofcontroversy.Methodsvarygreatly,anddifferenttechnicalanalystscansometimesmakecontradictorypredictionsfromthesamedata.Manyinvestorsclaimthattheyexperiencepositivereturns,butacademicappraisalsoftenfindthatithaslittlepredictivepower.[47]Of95modernstudies,56concludedthattechnicalanalysishadpositiveresults,althoughdata-snoopingbiasandotherproblemsmaketheanalysisdifficult.[6]Nonlinearpredictionusingneuralnetworksoccasionallyproducesstatisticallysignificantpredictionresults.[48]AFederalReserveworkingpaper[7]regardingsupportandresistancelevelsinshort-termforeignexchangerates"offersstrongevidencethatthelevelshelptopredictintradaytrendinterruptions",althoughthe"predictivepower"ofthoselevelswas"foundtovaryacrosstheexchangeratesandfirmsexamined". TechnicaltradingstrategieswerefoundtobeeffectiveintheChinesemarketplacebyarecentstudythatstates,"Finally,wefindsignificantpositivereturnsonbuytradesgeneratedbythecontrarianversionofthemoving-averagecrossoverrule,thechannelbreakoutrule,andtheBollingerbandtradingrule,afteraccountingfortransactioncostsof0.50%."[49] Aninfluential1992studybyBrocketal.whichappearedtofindsupportfortechnicaltradingruleswastestedfordatasnoopingandotherproblemsin1999;[50]thesamplecoveredbyBrocketal.wasrobusttodatasnooping. Subsequently,acomprehensivestudyofthequestionbyAmsterdameconomistGerwinGriffioenconcludesthat:"fortheU.S.,JapaneseandmostWesternEuropeanstockmarketindicestherecursiveout-of-sampleforecastingproceduredoesnotshowtobeprofitable,afterimplementinglittletransactioncosts.Moreover,forsufficientlyhightransactioncostsitisfound,byestimatingCAPMs,thattechnicaltradingshowsnostatisticallysignificantrisk-correctedout-of-sampleforecastingpowerforalmostallofthestockmarketindices."[19]Transactioncostsareparticularlyapplicableto"momentumstrategies";acomprehensive1996reviewofthedataandstudiesconcludedthatevensmalltransactioncostswouldleadtoaninabilitytocaptureanyexcessfromsuchstrategies.[51] InapaperpublishedintheJournalofFinance,Dr.AndrewW.Lo,directorMITLaboratoryforFinancialEngineering,workingwithHarryMamayskyandJiangWangfoundthat: Technicalanalysis,alsoknownas"charting",hasbeenapartoffinancialpracticeformanydecades,butthisdisciplinehasnotreceivedthesamelevelofacademicscrutinyandacceptanceasmoretraditionalapproachessuchasfundamentalanalysis.Oneofthemainobstaclesisthehighlysubjectivenatureoftechnicalanalysis –thepresenceofgeometricshapesinhistoricalpricechartsisoftenintheeyesofthebeholder.Inthispaper,weproposeasystematicandautomaticapproachtotechnicalpatternrecognitionusingnonparametrickernelregression,andapplythismethodtoalargenumberofU.S.stocksfrom1962to1996toevaluatetheeffectivenessoftechnicalanalysis.Bycomparingtheunconditionalempiricaldistributionofdailystockreturnstotheconditionaldistribution –conditionedonspecifictechnicalindicatorssuchashead-and-shouldersordouble-bottoms –wefindthatoverthe31-yearsampleperiod,severaltechnicalindicatorsdoprovideincrementalinformationandmayhavesomepracticalvalue.[8] InthatsamepaperDr.Lowrotethat"severalacademicstudiessuggestthat ...technicalanalysismaywellbeaneffectivemeansforextractingusefulinformationfrommarketprices."[8]SometechniquessuchasDrummondGeometryattempttoovercomethepastdatabiasbyprojectingsupportandresistancelevelsfromdifferingtimeframesintothenear-termfutureandcombiningthatwithreversiontothemeantechniques.[52] Efficient-markethypothesis[edit] Theefficient-markethypothesis(EMH)contradictsthebasictenetsoftechnicalanalysisbystatingthatpastpricescannotbeusedtoprofitablypredictfutureprices.Thusitholdsthattechnicalanalysiscannotbeeffective.EconomistEugeneFamapublishedtheseminalpaperontheEMHintheJournalofFinancein1970,andsaid"Inshort,theevidenceinsupportoftheefficientmarketsmodelisextensive,and(somewhatuniquelyineconomics)contradictoryevidenceissparse."[53] However,becausefuturestockpricescanbestronglyinfluencedbyinvestorexpectations,techniciansclaimitonlyfollowsthatpastpricesinfluencefutureprices.[54]Theyalsopointtoresearchinthefieldofbehavioralfinance,specificallythatpeoplearenottherationalparticipantsEMHmakesthemouttobe.Technicianshavelongsaidthatirrationalhumanbehaviorinfluencesstockprices,andthatthisbehaviorleadstopredictableoutcomes.[55]AuthorDavidAronsonsaysthatthetheoryofbehavioralfinanceblendswiththepracticeoftechnicalanalysis: Byconsideringtheimpactofemotions,cognitiveerrors,irrationalpreferences,andthedynamicsofgroupbehavior,behavioralfinanceofferssuccinctexplanationsofexcessmarketvolatilityaswellastheexcessreturnsearnedbystaleinformationstrategies....cognitiveerrorsmayalsoexplaintheexistenceofmarketinefficienciesthatspawnthesystematicpricemovementsthatallowobjectiveTA[technicalanalysis]methodstowork.[54] EMHadvocatesreplythatwhileindividualmarketparticipantsdonotalwaysactrationally(orhavecompleteinformation),theiraggregatedecisionsbalanceeachother,resultinginarationaloutcome(optimistswhobuystockandbidthepricehigherarecounteredbypessimistswhoselltheirstock,whichkeepsthepriceinequilibrium).[56]Likewise,completeinformationisreflectedinthepricebecauseallmarketparticipantsbringtheirownindividual,butincomplete,knowledgetogetherinthemarket.[56] Randomwalkhypothesis[edit] Therandomwalkhypothesismaybederivedfromtheweak-formefficientmarketshypothesis,whichisbasedontheassumptionthatmarketparticipantstakefullaccountofanyinformationcontainedinpastpricemovements(butnotnecessarilyotherpublicinformation).InhisbookARandomWalkDownWallStreet,PrincetoneconomistBurtonMalkielsaidthattechnicalforecastingtoolssuchaspatternanalysismustultimatelybeself-defeating:"Theproblemisthatoncesucharegularityisknowntomarketparticipants,peoplewillactinsuchawaythatpreventsitfromhappeninginthefuture."[57]Malkielhasstatedthatwhilemomentummayexplainsomestockpricemovements,thereisnotenoughmomentumtomakeexcessprofits.Malkielhascomparedtechnicalanalysisto"astrology".[58] Inthelate1980s,professorsAndrewLoandCraigMcKinlaypublishedapaperwhichcastdoubtontherandomwalkhypothesis.Ina1999responsetoMalkiel,LoandMcKinlaycollectedempiricalpapersthatquestionedthehypothesis'applicability[59]thatsuggestedanon-randomandpossiblypredictivecomponenttostockpricemovement,thoughtheywerecarefultopointoutthatrejectingrandomwalkdoesnotnecessarilyinvalidateEMH,whichisanentirelyseparateconceptfromRWH.Ina2000paper,AndrewLoback-analyzeddatafromtheU.S.from1962to1996andfoundthat"severaltechnicalindicatorsdoprovideincrementalinformationandmayhavesomepracticalvalue".[8]BurtonMalkieldismissedtheirregularitiesmentionedbyLoandMcKinlayasbeingtoosmalltoprofitfrom.[58] Technicianssay[who?]thattheEMHandrandomwalktheoriesbothignoretherealitiesofmarkets,inthatparticipantsarenotcompletelyrationalandthatcurrentpricemovesarenotindependentofpreviousmoves.[28][60]SomesignalprocessingresearchersnegatetherandomwalkhypothesisthatstockmarketpricesresembleWienerprocesses,becausethestatisticalmomentsofsuchprocessesandrealstockdatavarysignificantlywithrespecttowindowsizeandsimilaritymeasure.[61]Theyarguethatfeaturetransformationsusedforthedescriptionofaudioandbiosignalscanalsobeusedtopredictstockmarketpricessuccessfullywhichwouldcontradicttherandomwalkhypothesis. Therandomwalkindex(RWI)isatechnicalindicatorthatattemptstodetermineifastock'spricemovementisrandominnatureoraresultofastatisticallysignificanttrend.TherandomwalkindexattemptstodeterminewhenthemarketisinastronguptrendordowntrendbymeasuringpricerangesoverNandhowitdiffersfromwhatwouldbeexpectedbyarandomwalk(randomlygoingupordown).Thegreatertherangesuggestsastrongertrend.[62] ApplyingKahnemanandTversky'sprospecttheorytopricemovements,PaulV.Azzopardiprovidedapossibleexplanationwhyfearmakespricesfallsharplywhilegreedpushesuppricesgradually.[63]Thiscommonlyobservedbehaviourofsecuritiespricesissharplyatoddswithrandomwalk.Bygauginggreedandfearinthemarket,[64]investorscanbetterformulatelongandshortportfoliostances. Scientifictechnicalanalysis[edit] CaginalpandBalenovichin1994[65]usedtheirasset-flowdifferentialequationsmodeltoshowthatthemajorpatternsoftechnicalanalysiscouldbegeneratedwithsomebasicassumptions.Someofthepatternssuchasatrianglecontinuationorreversalpatterncanbegeneratedwiththeassumptionoftwodistinctgroupsofinvestorswithdifferentassessmentsofvaluation.Themajorassumptionsofthemodelsarethatthefinitenessofassetsandtheuseoftrendaswellasvaluationindecisionmaking.Manyofthepatternsfollowasmathematicallylogicalconsequencesoftheseassumptions. Oneoftheproblemswithconventionaltechnicalanalysishasbeenthedifficultyofspecifyingthepatternsinamannerthatpermitsobjectivetesting. Japanesecandlestickpatternsinvolvepatternsofafewdaysthatarewithinanuptrendordowntrend.CaginalpandLaurent[66]werethefirsttoperformasuccessfullargescaletestofpatterns.Amathematicallyprecisesetofcriteriaweretestedbyfirstusingadefinitionofashort-termtrendbysmoothingthedataandallowingforonedeviationinthesmoothedtrend.Theythenconsideredeightmajorthree-daycandlestickreversalpatternsinanon-parametricmanneranddefinedthepatternsasasetofinequalities.TheresultswerepositivewithanoverwhelmingstatisticalconfidenceforeachofthepatternsusingthedatasetofallS&P500stocksdailyforthefive-yearperiod1992–1996. Amongthemostbasicideasofconventionaltechnicalanalysisisthatatrend,onceestablished,tendstocontinue.However,testingforthistrendhasoftenledresearcherstoconcludethatstocksarearandomwalk.Onestudy,performedbyPoterbaandSummers,[67]foundasmalltrendeffectthatwastoosmalltobeoftradingvalue.AsFisherBlack noted,[68]"noise"intradingpricedatamakesitdifficulttotesthypotheses. Onemethodforavoidingthisnoisewasdiscoveredin1995byCaginalpandConstantine[69]whousedaratiooftwoessentiallyidenticalclosed-endfundstoeliminateanychangesinvaluation.Aclosed-endfund(unlikeanopen-endfund)tradesindependentlyofitsnetassetvalueanditssharescannotberedeemed,butonlytradedamonginvestorsasanyotherstockontheexchanges.Inthisstudy,theauthorsfoundthatthebestestimateoftomorrow'spriceisnotyesterday'sprice(astheefficient-markethypothesiswouldindicate),norisitthepuremomentumprice(namely,thesamerelativepricechangefromyesterdaytotodaycontinuesfromtodaytotomorrow).Butratheritisalmostexactlyhalfwaybetweenthetwo. Startingfromthecharacterizationofthepasttimeevolutionofmarketpricesintermsofpricevelocityandpriceacceleration,anattempttowardsageneralframeworkfortechnicalanalysishasbeendeveloped,withthegoalofestablishingaprincipledclassificationofthepossiblepatternscharacterizingthedeviationordefectsfromtherandomwalkmarketstateanditstimetranslationalinvariantproperties.[70]Theclassificationreliesontwodimensionlessparameters,theFroudenumbercharacterizingtherelativestrengthoftheaccelerationwithrespecttothevelocityandthetimehorizonforecastdimensionalizedtothetrainingperiod.Trend-followingandcontrarianpatternsarefoundtocoexistanddependonthedimensionlesstimehorizon.Usingarenormalisationgroupapproach,theprobabilisticbasedscenarioapproachexhibitsstatisticallysignificantpredictivepowerinessentiallyalltestedmarketphases. AsurveyofmodernstudiesbyParkandIrwin[71]showedthatmostfoundapositiveresultfromtechnicalanalysis. In2011,CaginalpandDeSantis[72]haveusedlargedatasetsofclosed-endfunds,wherecomparisonwithvaluationispossible,inordertodeterminequantitativelywhetherkeyaspectsoftechnicalanalysissuchastrendandresistancehavescientificvalidity.Usingdatasetsofover100,000pointstheydemonstratethattrendhasaneffectthatisatleasthalfasimportantasvaluation.Theeffectsofvolumeandvolatility,whicharesmaller,arealsoevidentandstatisticallysignificant.Animportantaspectoftheirworkinvolvesthenonlineareffectoftrend.Positivetrendsthatoccurwithinapproximately3.7standarddeviationshaveapositiveeffect.Forstrongeruptrends,thereisanegativeeffectonreturns,suggestingthatprofittakingoccursasthemagnitudeoftheuptrendincreases.Fordowntrendsthesituationissimilarexceptthatthe"buyingondips"doesnottakeplaceuntilthedowntrendisa4.6standarddeviationevent.Thesemethodscanbeusedtoexamineinvestorbehaviorandcomparetheunderlyingstrategiesamongdifferentassetclasses. In2013,KimManLuiandTChongpointedoutthatthepastfindingsontechnicalanalysismostlyreportedtheprofitabilityofspecifictradingrulesforagivensetofhistoricaldata.Thesepaststudieshadnottakenthehumantraderintoconsiderationasnoreal-worldtraderwouldmechanicallyadoptsignalsfromanytechnicalanalysismethod.Therefore,tounveilthetruthoftechnicalanalysis,weshouldgetbacktounderstandtheperformancebetweenexperiencedandnovicetraders.Ifthemarketreallywalksrandomly,therewillbenodifferencebetweenthesetwokindsoftraders.However,itisfoundbyexperimentthattraderswhoaremoreknowledgeableontechnicalanalysissignificantlyoutperformthosewhoarelessknowledgeable.[73] Ticker-tapereading[edit] Mainarticle:Tickertape Untilthemid-1960s,tapereadingwasapopularformoftechnicalanalysis.Itconsistedofreadingmarketinformationsuchasprice,volume,ordersize,andsoonfromapaperstripwhichranthroughamachinecalledastockticker.Marketdatawassenttobrokeragehousesandtothehomesandofficesofthemostactivespeculators.Thissystemfellintodisusewiththeadventofelectronicinformationpanelsinthelate60's,andlatercomputers,whichallowfortheeasypreparationofcharts. JesseLivermore,oneofthemostsuccessfulstockmarketoperatorsofalltime,wasprimarilyconcernedwithtickertapereadingsinceayoungage.Hefollowedhisown(mechanical)tradingsystem(hecalleditthe'marketkey'),whichdidnotneedcharts,butwasrelyingsolelyonpricedata.Hedescribedhismarketkeyindetailinhis1940sbook'HowtoTradeinStocks'.[74]Livermore'ssystemwasdeterminingmarketphases(trend,correctionetc.)viapastpricedata.Healsomadeuseofvolumedata(whichheestimatedfromhowstocksbehavedandvia'markettesting',aprocessoftestingmarketliquidityviasendinginsmallmarketorders),asdescribedinhis1940sbook. Quotationboard[edit] Anotherformoftechnicalanalysisusedsofarwasviainterpretationofstockmarketdatacontainedinquotationboards,thatinthetimesbeforeelectronicscreens,werehugechalkboardslocatedinthestockexchanges,withdataofthemainfinancialassetslistedonexchangesforanalysisoftheirmovements.[75]Itwasmanuallyupdatedwithchalk,withtheupdatesregardingsomeofthesedatabeingtransmittedtoenvironmentsoutsideofexchanges(suchasbrokeragehouses,bucketshops,etc.)viatheaforementionedtape,telegraph,telephoneandlatertelex.[76] Thisanalysistoolwasusedboth,onthespot,mainlybymarketprofessionals,aswellasbygeneralpublicthroughtheprintedversionsinnewspapersshowingthedataofthenegotiationsofthepreviousday,forswingandpositiontrades.[77] Chartingtermsandindicators[edit] Concepts[edit] Averagetruerange –averageddailytradingrange,adjustedforpricegaps. Breakout –theconceptwherebypricesforcefullypenetrateanareaofpriorsupportorresistance,usually,butnotalways,accompaniedbyanincreaseinvolume. Chartpattern –distinctivepatterncreatedbythemovementofsecurityorcommoditypricesonachart Cycles –timetargetsforpotentialchangeinpriceaction(priceonlymovesup,down,orsideways) Deadcatbounce –thephenomenonwherebyaspectaculardeclineinthepriceofastockisimmediatelyfollowedbyamoderateandtemporaryrisebeforeresumingitsdownwardmovement Elliottwaveprincipleandthegoldenratiotocalculatesuccessivepricemovementsandretracements Fibonacciratios –usedasaguidetodeterminesupportandresistance Momentum –therateofpricechange Pointandfigureanalysis –Apriced-basedanalyticalapproachemployingnumericalfilterswhichmayincorporatetimereferences,thoughignorestimeentirelyinitsconstruction Resistance –apricelevelthatmaypromptanetincreaseofsellingactivity Support –apricelevelthatmaypromptanetincreaseofbuyingactivity Trending –thephenomenonbywhichpricemovementtendstopersistinonedirectionforanextendedperiodoftime Typesofcharts[edit] Candlestickchart –OfJapaneseoriginandsimilartoOHLC,candlestickswidenandfilltheintervalbetweentheopenandclosepricestoemphasizetheopen/closerelationship.IntheWest,oftenblackorredcandlebodiesrepresentacloselowerthantheopen,whilewhite,greenorbluecandlesrepresentaclosehigherthantheopenprice. Linechart –Connectstheclosingpricevalueswithlinesegments.Youcanalsochoosetodrawthelinechartusingopen,highorlowprice. Open-high-low-closechart –OHLCcharts,alsoknownasbarcharts,plotthespanbetweenthehighandlowpricesofatradingperiodasaverticallinesegmentatthetradingtime,andtheopenandclosepriceswithhorizontaltickmarksontherangeline,usuallyaticktotheleftfortheopenpriceandaticktotherightfortheclosingprice. Pointandfigurechart –acharttypeemployingnumericalfilterswithonlypassingreferencestotime,andwhichignorestimeentirelyinitsconstruction. Overlays[edit] Overlaysaregenerallysuperimposedoverthemainpricechart. Bollingerbands –arangeofpricevolatility Channel –apairofparalleltrendlines Ichimokukinkohyo –amovingaverage-basedsystemthatfactorsintimeandtheaveragepointbetweenacandle'shighandlow Movingaverage –anaverageoverawindowoftimebeforeandafteragiventimepointthatisrepeatedateachtimepointinthegivenchart.Amovingaveragecanbethoughtofasakindofdynamictrend-line. ParabolicSAR –Wilder'strailingstopbasedonpricestendingtostaywithinaparaboliccurveduringastrongtrend Pivotpoint –derivedbycalculatingthenumericalaverageofaparticularcurrency'sorstock'shigh,lowandclosingprices Resistance –apricelevelthatmayactasaceilingaboveprice Support –apricelevelthatmayactasafloorbelowprice Trendline –aslopinglinedescribedbyatleasttwopeaksortwotroughs ZigZag –Thischartoverlaythatshowsfilteredpricemovementsthataregreaterthanagivenpercentage. Breadthindicators[edit] Theseindicatorsarebasedonstatisticsderivedfromthebroadmarket. Advance–declineline –apopularindicatorofmarketbreadth. McClellanOscillator–apopularclosed-formindicatorofbreadth. McClellanSummationIndex–apopularopen-formindicatorofbreadth. Price-basedindicators[edit] Theseindicatorsaregenerallyshownbeloworabovethemainpricechart. Averagedirectionalindex –awidelyusedindicatoroftrendstrength. Commoditychannelindex –identifiescyclicaltrends. MACD –movingaverageconvergence/divergence. Momentum –therateofpricechange. Relativestrengthindex(RSI) –oscillatorshowingpricestrength. RelativeVigorIndex(RVI) –oscillatormeasurestheconvictionofarecentpriceactionandthelikelihoodthatitwillcontinue. Stochasticoscillator –closepositionwithinrecenttradingrange. Trix –anoscillatorshowingtheslopeofatriple-smoothedexponentialmovingaverage. VortexIndicator –anindicatorusedtoidentifytheexistence,continuation,initiationorterminationoftrends. Volume-basedindicators[edit] Accumulation/distributionindex –basedontheclosewithintheday'srange. Moneyflowindex –theamountofstocktradedondaysthepricewentup. On-balancevolume –themomentumofbuyingandsellingstocks. TradingwithMixingIndicators[edit] MACD&Averagedirectionalindex MACD&SuperTrend MACD&Movingaverage MACD&RSI MACD&MovingAverages Seealso[edit] Algorithmictrading Apophenia Behavioralfinance CertifiedFinancialTechnician/MasterofFinancialTechnicalAnalysis CharteredMarketTechnician Clusteringillusion Financialsignalprocessing Marketanalysis Markettiming Mathematicalfinance Multimediainformationretrieval Multiplecomparisonsproblem Overfitting Priceactiontrading Texassharpshooterfallacy References[edit] ^abKirkpatrick&Dahlquist(2006),p. 3 ^Akston,Dr.Hugh(13January2009)."BeatingtheQuantsatTheirOwnGame". ^Mizrach,Bruce;Weerts,Susan(27November2007)."HighsandLows:ABehavioralandTechnicalAnalysis".SSRN 1118080.Citejournalrequires|journal=(help) ^PaulV.Azzopardi(2010).BehaviouralTechnicalAnalysis:Anintroductiontobehaviouralfinanceanditsroleintechnicalanalysis.HarrimanHouse.ISBN 978-1905641413. ^AndrewW.Lo;JasminaHasanhodzic(2010).TheEvolutionofTechnicalAnalysis:FinancialPredictionfromBabylonianTabletstoBloombergTerminals.BloombergPress.p. 150.ISBN 978-1576603499.Retrieved8August2011. ^abcIrwin,ScottH.;Park,Cheol-Ho(2007)."WhatDoWeKnowAbouttheProfitabilityofTechnicalAnalysis?".JournalofEconomicSurveys.21(4):786–826.doi:10.1111/j.1467-6419.2007.00519.x.S2CID 154488391. ^abcOsler,Karen(July2000)."SupportforResistance:TechnicalAnalysisandIntradayExchangeRates,"FRBNYEconomicPolicyReview(abstractandpaperhere). ^abcdLo,AndrewW.;Mamaysky,Harry;Wang,Jiang(2000)."FoundationsofTechnicalAnalysis:ComputationalAlgorithms,StatisticalInference,andEmpiricalImplementation".JournalofFinance.55(4):1705–1765.CiteSeerX 10.1.1.134.1546.doi:10.1111/0022-1082.00265. ^JosephdelaVega,ConfusióndeConfusiones,1688 ^Nison,Steve(1991).JapaneseCandlestickChartingTechniques.pp. 15–18.ISBN 978-0-13-931650-0. ^Nison,Steve(1994).BeyondCandlesticks:NewJapaneseChartingTechniquesRevealed,JohnWileyandSons,p.14.ISBN 0-471-00720-X ^PaulV.Azzopardi,"BehavioralTechnicalAnalysis",ibid ^abcdMurphy,JohnJ.TechnicalAnalysisoftheFinancialMarkets.NewYorkInstituteofFinance,1999,pp.1–5,24–31.ISBN 0-7352-0066-1 ^"PrimePair.comHeadandShouldersPattern".Archivedfromtheoriginalon6January2015.Retrieved6January2015. ^Elder(1993),PartIII:ClassicalChartAnalysis ^Elder(1993),PartII:"MassPsychology";Chapter17:"ManagingversusForecasting",pp.65–68 ^Paulos,J.A.(2003).AMathematicianPlaystheStockMarket.BasicBooks.p. 53. ^Fama,Eugene(1970)."EfficientCapitalMarkets:AReviewofTheoryandEmpiricalWork"(PDF).TheJournalofFinance.25(2):383–417.doi:10.2307/2325486.JSTOR 2325486. ^abGriffioen,TechnicalAnalysisinFinancialMarkets ^Schwager,JackD.GettingStartedinTechnicalAnalysis.Wiley,1999,p.2.ISBN 0-471-29542-6 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^abKahn,MichaelN.(2006).TechnicalAnalysisPlainandSimple:ChartingtheMarketsinYourLanguage,FinancialTimesPress,UpperSaddleRiver,NewJersey,p.80.ISBN 0-13-134597-4. ^Baiynd,Anne-Marie(2011).TheTradingBook:ACompleteSolutiontoMasteringTechnicalSystemsandTradingPsychology.McGraw-Hill.p. 272.ISBN 9780071766494.Archivedfromtheoriginalon25March2012.Retrieved30April2013. ^Kirkpatrick&Dahlquist(2006),p. 87 ^Kirkpatrick&Dahlquist(2006),p. 86 ^TechnicalAnalysis:TheCompleteResourceforFinancialMarketTechnicians,p.7 ^"Home–AustralianTechnicalAnalystsAssociation". ^"Home". ^"CMTAssociationKnowledgeBase".Archivedfromtheoriginalon14October2017.Retrieved16August2017. ^Wiley(2021).CMTLevelI2021:AnIntroductiontoTechnicalAnalysis.Wiley.ISBN 978-1119768050. ^K.Funahashi,Ontheapproximaterealizationofcontinuousmappingsbyneuralnetworks,NeuralNetworksvol2,1989 ^K.Hornik,Multilayerfeed-forwardnetworksareuniversalapproximators,NeuralNetworks,vol2,1989 ^R.Lawrence.UsingNeuralNetworkstoForecastStockMarketPrices ^B.Egelietal.StockMarketPredictionUsingArtificialNeuralNetworksArchived20June2007attheWaybackMachine ^M.Zekić.NeuralNetworkApplicationsinStockMarketPredictions–AMethodologyAnalysisArchived24April2012attheWaybackMachine ^Elder(1993),pp. 54,116–118 ^Elder(1993) ^ltd,ResearchandMarkets."TheCapitalGrowthLetter–ResearchandMarkets". ^http://www.iijournals.com/JOT/default.asp?Page=2&ISS=22278&SID=644085 ^"SFO".Archivedfromtheoriginalon6October2007.Retrieved27August2007. ^Browning,E.S.(31July2007)."Readingmarkettealeaves".TheWallStreetJournalEurope.DowJones.pp. 17–18. ^Skabar,Cloete,Networks,FinancialTradingandtheEfficientMarketsHypothesisArchived18July2011attheWaybackMachine ^NauzerJ.Balsara,GaryChenandLinZheng"TheChineseStockMarket:AnExaminationoftheRandomWalkModelandTechnicalTradingRules"TheQuarterlyJournalofBusinessandEconomics,Spring2007 ^Sullivan,R.;Timmermann,A.;White,H.(1999)."Data-Snooping,TechnicalTradingRulePerformance,andtheBootstrap".TheJournalofFinance.54(5):1647–1691.CiteSeerX 10.1.1.50.7908.doi:10.1111/0022-1082.00163. ^Chan,L.K.C.;Jegadeesh,N.;Lakonishok,J.(1996)."MomentumStrategies".TheJournalofFinance.51(5):1681–1713.doi:10.2307/2329534.JSTOR 2329534. ^DavidKeller,"BreakthroughsinTechnicalAnalysis;NewThinkingfromtheWorld'sTopMinds,"NewYork,BloombergPress,2007,ISBN 978-1-57660-242-3pp.1–19 ^EugeneFama,"EfficientCapitalMarkets:AReviewofTheoryandEmpiricalWork,"TheJournalofFinance,volume25,issue2(May1970),pp.383–417. ^abAronson,DavidR.(2006).Evidence-BasedTechnicalAnalysis,Hoboken,NewJersey:JohnWileyandSons,pages357,355–356,342.ISBN 978-0-470-00874-4. ^Prechter,RobertRJr;Parker,WayneD(2007)."TheFinancial/EconomicDichotomyinSocialBehavioralDynamics:TheSocionomicPerspective".JournalofBehavioralFinance.8(2):84–108.CiteSeerX 10.1.1.615.763.doi:10.1080/15427560701381028.S2CID 55114691.CS1maint:multiplenames:authorslist(link) ^abClarke,J.,T.Jandik,andGershonMandelker(2001)."Theefficientmarketshypothesis,"ExpertFinancialPlanning:AdvicefromIndustryLeaders,ed.R.Arffa,126–141.NewYork:Wiley&Sons. ^BurtonMalkiel,ARandomWalkDownWallStreet,W.W.Norton&Company(April2003)p.168. ^abRobertHuebscher.BurtonMalkielTalkstheRandomWalk.7July2009. ^Lo,Andrew;MacKinlay,Craig.ANon-RandomWalkDownWallStreet,PrincetonUniversityPress,1999.ISBN 978-0-691-05774-3 ^Poser,StevenW.(2003).ApplyingElliottWaveTheoryProfitably,JohnWileyandSons,p.71.ISBN 0-471-42007-7. ^Eidenberger,Horst(2011)."FundamentalMediaUnderstanding"Atpress.ISBN 978-3-8423-7917-6. ^"AsiaPacFinance.comTradingIndicatorGlossary".Archivedfromtheoriginalon1September2011.Retrieved1August2011. ^Azzopardi,PaulV.(2012),"WhyFinancialMarketsRiseSlowlybutFallSharply:Analysingmarketbehaviourwithbehaviouralfinance",HarrimanHouse,ASIN:B00B0Y6JIC ^"Fear&GreedIndex-InvestorSentiment". ^GunduzCaginalp&DonaldBalenovich(2003)."Atheoreticalfoundationfortechnicalanalysis"(PDF).JournalofTechnicalAnalysis.59:5–22.CS1maint:usesauthorsparameter(link) ^Caginalp,G.;Laurent,H.(1998)."ThePredictivePowerofPricePatterns".AppliedMathematicalFinance.5(3–4):181–206.doi:10.1080/135048698334637.S2CID 44237914. ^Poterba,J.M.;Summers,L.H.(1988)."Meanreversioninstockprices:EvidenceandImplications".JournalofFinancialEconomics.22:27–59.doi:10.1016/0304-405x(88)90021-9. ^Black,F(1986)."Noise".JournalofFinance.41(3):529–43.doi:10.1111/j.1540-6261.1986.tb04513.x. ^Caginalp,G.;Constantine,G.(1995)."Statisticalinferenceandmodelingofmomentuminstockprices".AppliedMathematicalFinance.2(4):225–242.doi:10.1080/13504869500000012.S2CID 154176805. ^J.V.Andersen,S.GluzmanandD.Sornette,FundamentalFrameworkforTechnicalAnalysis,EuropeanPhysicalJournalB14,579–601(2000) ^C-HParkandS.H.Irwin,"TheProfitabilityofTechnicalAnalysis:AReview"AgMASProjectResearchReportNo.2004-04 ^G.CaginalpandM.DeSantis,"Nonlinearityinthedynamicsoffinancialmarkets,"NonlinearAnalysis:RealWorldApplications,12(2),1140–1151,2011. ^K.M.LuiandT.T.LChong,"DoTechnicalAnalystsOutperformNoviceTraders:ExperimentalEvidence"EconomicsBulletin.33(4),3080–3087,2013. ^Livermore(1940) ^Lefèvre(2000),pp. 1,18 ^Lefèvre(2000),p. 17 ^Livermore(1940),pp. 17–18 shettypavitra(21February2019)."HowcanyouperformbettertechnicalanalysisoftheIndianStockMarket?".Train2Trade.Retrieved16April2021. Bibliography[edit] Elder,Alexander(1993).TradingforaLiving;Psychology,TradingTactics,MoneyManagement.JohnWiley&Sons.ISBN 978-0-47159224-2. Kirkpatrick,CharlesD.;Dahlquist,JulieR.(2006).TechnicalAnalysis:TheCompleteResourceforFinancialMarketTechnicians.FinancialTimesPress.ISBN 978-0-13-153113-0. Lefèvre,Edwin(2000)[1923].ReminiscencesofaStockOperator:WithnewCommentaryandInsightsontheLifeandTimesofJesseLivermore.JohnWiley&Sons.ISBN 9780470481592. Livermore,JesseLauriston(1940).HowtoTradeinStocks.Duell,Sloan&PearceNY. Furtherreading[edit] Azzopardi,PaulV.BehaviouralTechnicalAnalysis:Anintroductiontobehaviouralfinanceanditsroleintechnicalanalysis.HarrimanHouse,2010.ISBN 978-1905641413 Colby,RobertW.TheEncyclopediaofTechnicalMarketIndicators.2ndEdition.McGrawHill,2003.ISBN 0-07-012057-9 Covel,Michael.TheCompleteTurtleTrader.HarperCollins,2007.ISBN 9780061241703 Douglas,Mark.TheDisciplinedTrader.NewYorkInstituteofFinance,1990.ISBN 0-13-215757-8 Edwards,RobertD.;Magee,John;Bassetti,W.H.C.TechnicalAnalysisofStockTrends,9thEdition(Hardcover).AmericanManagementAssociation,2007.ISBN 0-8493-3772-0 Fox,Justin.TheMythoftheRationalMarket.HarperCollings,2009.ISBN 9780060598990 Hurst,J.M.TheProfitMagicofStockTransactionTiming.Prentice-Hall,1972.ISBN 0-13-726018-0 Neill,HumphreyB.TapeReading&MarketTactics.Firsteditionof1931.MarketPlace2007reprintISBN 1592802621 Neill,HumphreyB.TheArtofContraryThinking.CaxtonPress1954. Pring,MartinJ.TechnicalAnalysisExplained:TheSuccessfulInvestor'sGuidetoSpottingInvestmentTrendsandTurningPoints.McGrawHill,2002.ISBN 0-07-138193-7 Raschke,LindaBradford;Connors,LawrenceA.StreetSmarts:HighProbabilityShort-TermTradingStrategies.M.GordonPublishingGroup,1995.ISBN 0-9650461-0-9 RolloTape&Wyckoff,RichardD.StudiesinTapeReadingTheTickerPublishingCo.NY1910. Tharp,VanK.DefinitiveGuidetoPositionSizingInternationalInstituteofTradingMastery,2008.ISBN 0935219099 Wilder,J.Welles.NewConceptsinTechnicalTradingSystems.TrendResearch,1978.ISBN 0-89459-027-8 LadisKonecny,StocksandExchange–theonlyBookyouneed,2013,ISBN 9783848220656,technicalanalysis=chapter8. Schabackers,RichardW.StockMarketTheoryandPractice,2011.ISBN 9781258159474 Externallinks[edit] TechnicalanalysisatWikipedia'ssisterprojectsDefinitionsfromWiktionaryMediafromCommonsTextbooksfromWikibooksResourcesfromWikiversity Internationalandnationalorganizations InternationalFederationofTechnicalAnalysts Singapore:TechnicalAnalystsSociety(Singapore) UnitedStates:CMTAssociation UnitedKingdom:SocietyofTechnicalAnalysts vteTechnicalanalysisConcepts Breakout Deadcatbounce Dowtheory Elliottwaveprinciple Markettrend Charts Candlestick Renko Kagi Line Open-high-low-close Pointandfigure PatternsChart Broadeningtop Cupandhandle Doubletopanddoublebottom Flagandpennant Gap Headandshoulders Islandreversal Pricechannels Triangle Tripletopandtriplebottom Wedgepattern CandlestickSimple Doji Hammer Hangingman Invertedhammer Marubozu Shootingstar Spinningtop Complex Hikkakepattern Morningstar Threeblackcrows Threewhitesoldiers IndicatorsSupport&resistance Bottom Fibonacciretracement Pivotpoint(PP) Top Trend Averagedirectionalindex(A.D.X.) Commoditychannelindex(CCI) Detrendedpriceoscillator(DPO) Knowsurethingoscillator(KST) IchimokuKinkōHyō Movingaverageconvergence/divergence(MACD) Massindex Movingaverage(MA) ParabolicSAR(SAR) Smartmoneyindex(SMI) Trendline Trix Vortexindicator(VI) Momentum Moneyflowindex(MFI) Relativestrengthindex(RSI) Stochasticoscillator Truestrengthindex(TSI) Ultimateoscillator Williams%R(%R) Volume Accumulation/distributionline Easeofmovement(EMV) Forceindex(FI) Negativevolumeindex(NVI) On-balancevolume(OBV) Put/callratio(PCR) Volume–pricetrend(VPT) Volatility Averagetruerange(ATR) BollingerBands(BB) Donchianchannel Keltnerchannel CBOEMarketVolatilityIndex(VIX) Standarddeviation(σ) Breadth Advance–declineline(ADL) Armsindex(TRIN) McClellanoscillator Other Coppockcurve Ulcerindex Analysts JohnBollinger NedDavis CharlesDow RalphNelsonElliott JohnMurphy MarkHulbert vteFinancialmarketsTypesofmarkets Primarymarket Secondarymarket Thirdmarket Fourthmarket Typesofstocks Commonstock Goldenshare Preferredstock Restrictedstock Trackingstock Sharecapital Authorisedcapital Issuedshares Sharesoutstanding Treasurystock Participants Broker-dealer Daytrader Floorbroker Floortrader Investor Marketmaker Proprietarytrader Quantitativeanalyst Financiallaw Regulator Stocktrader Exchanges Electroniccommunicationnetwork Listofstockexchanges Tradinghours Multilateraltradingfacility Over-the-counter Stockvaluation Alpha Arbitragepricingtheory Beta Bid–askspread Bookvalue Capitalassetpricingmodel Capitalmarketline Dividenddiscountmodel Dividendyield Earningspershare Earningsyield Fedmodel Netassetvalue Securitycharacteristicline Securitymarketline T-model Tradingtheoriesandstrategies Algorithmictrading Buyandhold Contrarianinvesting Daytrading Dollarcostaveraging Efficient-markethypothesis Fundamentalanalysis Growthstock Markettiming Modernportfoliotheory Momentuminvesting Mosaictheory Pairstrade Post-modernportfoliotheory Randomwalkhypothesis Sectorrotation Styleinvesting Swingtrading Technicalanalysis Trendfollowing Valueaveraging Valueinvesting Relatedterms Blocktrade Crosslisting Darkpool Dividend Dual-listedcompany DuPontanalysis Efficientfrontier Flight-to-quality Governmentbond Greenspanput Haircut Initialpublicoffering Long Margin Marketanomaly Marketcapitalization Marketdepth Marketmanipulation Markettrend Meanreversion Momentum Openoutcry Position Publicfloat Publicoffering Rally Returns-basedstyleanalysis Reversestocksplit Sharerepurchase Shortselling Slippage Speculation Stockdilution Stockexchange Stockmarketindex Stocksplit Trade Uptickrule Volatility Votinginterest Yield AuthoritycontrolNationallibraries UnitedStates CzechRepublic Other MicrosoftAcademic Retrievedfrom"https://en.wikipedia.org/w/index.php?title=Technical_analysis&oldid=1058602084" Categories:TechnicalanalysisCommoditymarketsDerivatives(finance)ForeignexchangemarketStockmarketPseudoscienceHiddencategories:CS1errors:missingperiodicalWebarchivetemplatewaybacklinksCS1maint:multiplenames:authorslistCS1maint:usesauthorsparameterUsedmydatesfromSeptember2021ArticleswithshortdescriptionShortdescriptionmatchesWikidataWikipediaarticlesinneedofupdatingfromJune2021AllWikipediaarticlesinneedofupdatingAllarticleswithunsourcedstatementsArticleswithunsourcedstatementsfromFebruary2020ArticleswithunsourcedstatementsfromAugust2017Allarticleswithspecificallymarkedweasel-wordedphrasesArticleswithspecificallymarkedweasel-wordedphrasesfromMarch2011PagesusingSisterprojectlinkswithdefaultsearchArticleswithLCCNidentifiersArticleswithNKCidentifiersArticleswithMAidentifiers Navigationmenu Personaltools NotloggedinTalkContributionsCreateaccountLogin Namespaces ArticleTalk Variants expanded collapsed Views ReadEditViewhistory More expanded collapsed Search Navigation MainpageContentsCurrenteventsRandomarticleAboutWikipediaContactusDonate Contribute HelpLearntoeditCommunityportalRecentchangesUploadfile Tools WhatlinkshereRelatedchangesUploadfileSpecialpagesPermanentlinkPageinformationCitethispageWikidataitem Print/export DownloadasPDFPrintableversion Inotherprojects WikimediaCommons Languages العربيةBân-lâm-gúБългарскиCatalàČeštinaDeutschEestiΕλληνικάEspañolEuskaraفارسیFrançaisGaeilge한국어Հայերենहिन्दीHrvatskiBahasaIndonesiaItalianoעבריתLietuviųМакедонскиमराठीNederlandsनेपाली日本語NorskbokmålPolskiPortuguêsRomânăРусскийSlovenčinaSlovenščinaSuomiSvenskaதமிழ்ไทยУкраїнськаTiếngViệt文言粵語中文 Editlinks