| Technical analysis is the use of past prices, to guide future trading decisions in financial markets. And the efficiency of markets states that market prices ‘instantaneously and fully reflect all relevant information’ and therefore, that asset time series follow a random walk.
Of course, we develop in details these two issues of technical analysis and Efficient Market Hypothesis (EMH) in the core of this book. Already, we can understand that both can not be correct together. Either market are ‘perfectly’ efficient and no gain be done on the historical observation of prices, or Technical Analysis is useful and the contrary is correct!
In practice, technical analysis attracts the attention of economists as its successes, if any, could cast doubt upon the Efficient Market Hypothesis (EMH). This discussion is even more essential for Forex markets as Currency exchange would be a good candidate for efficiency as a consequence of its large liquidity... |
