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Efficient markets hypothesis and technical analysis

   

Added on  2020-10-23

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TECHNICAL ANALYSIS ANDEFFICIENCY MARKETHYPOTHESIS
Efficient markets hypothesis and technical analysis_1

TABLE OF CONTENTS`Technical analysis, the prediction of price movements based on past price movements, has beenshown to generate statistically significant profits despite its incompatibility with mosteconomists’ notions of efficient markets”.’.....................................................................................1REFERENCES................................................................................................................................6
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`Technical analysis, the prediction of price movements based on past pricemovements, has been shown to generate statistically significant profitsdespite its incompatibility with most economists’ notions of efficientmarkets”.’To predict the growth and fall of the market trend on which financialist uses various toolsand measures to have comparatively accurate prediction based on price movement through pastrecords. These are the techniques which enables them in predicting the growth and fall of themarket share and analysing the efficiency of the market in the upcoming period. These predictionon the other hand will be effective in terms of investment decisions which is collectively basedon development of economy, domestic production as well as fundamental analysis.In the technical analysis, on which financial analysts predicts movement of share price in theupcoming period with the help of tools such as charts, Trendline analysis etc. These graphicalpresentations are beneficiary in terms of analyzing the direction of trend whether upward ordownward (Technical Analysis, 2018). Therefore, the specialist in market prediction who havebetter experience will predict that the market will be profitable in the next period or it may fall.Along with this, there have been various other techniques which are being useful in respect withpredicting the market efficiency.Share prices and market index will vary on the basis of various non-fundamental or non-technical factors such as news regarding company’s scam, frauds as well as insolvency are themain reasons on which there will be impacts of external factors which creates insecurity amongthe investors in investing activities (de Souza and et.al., 2018). It impacts on movement of shareprice index in a market (Arthur, 2018). Due to such impacts the prediction and forecasting of theshare prices will not being effective by financial analysts as per influences of various measureswill affect pricing of shares.In efficiency market hypothesis on which financialists traces the past records of pricemovement in a security market on which the efficiency of market to contribute in single as wellas multi liner asset prices have been tested (Alhashel, Almudhaf and Hansz, 2018). There hasbeen testing on the empirical regularities and anomalies in the stocks, bonds, currency as well ascommodity in the market. Efficient market hypothesis is one of the important paradigms oftraditional finance theories. Fama (1970) defined efficient market as a market as a market with1
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