On Technical Analysis
- 1 October 1989
- journal article
- research article
- Published by Oxford University Press (OUP) in The Review of Financial Studies
- Vol. 2 (4) , 527-551
- https://doi.org/10.1093/rfs/2.4.527
Abstract
Technical analysis, or the use of past prices to infer private information, has value in a model in which prices are not fully revealing and traders have rational conjectures about the relation between prices and signals. A two-period dynamic model of equilibrium is used to demonstrate that rational investors use historical prices in forming their demands and to illustrate the sensitivity of the value of technical analysis to changes in the values of the exogenous parameters.Keywords
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