Is candlestick continuation patterns applicable in Malaysian stock market
Technical analysis is deemed to be an anathema to the modern finance theory as it contradicts with the efficient market hypothesis, typically the weak form market efficiency which forbids the utilization of past prices and trading volume data to predict future market movement. However, the techn...
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| Main Authors: | , , , |
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| Format: | E-Article |
| Language: | English |
| Published: |
EDP Sciences
2017
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| Subjects: | |
| Online Access: | http://ir.unimas.my/id/eprint/17201/1/Is%20candlestick%20continuation%20patterns%20applicable%20in%20Malaysian%20Stock%20market%20%28abstract%29.pdf http://ir.unimas.my/id/eprint/17201/ https://www.shs-conferences.org/ |
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| Summary: | Technical analysis is deemed to be an anathema to the modern
finance theory as it contradicts with the efficient market hypothesis,
typically the weak form market efficiency which forbids the utilization of
past prices and trading volume data to predict future market movement.
However, the technical indicator of candlestick trading strategy is widely
applied by traders for short term investment. This study thus investigates
on the predictive power of candlestick charting which concentrates on the
application of continuation patterns in Malaysian stock market from 2000
to 2014. Skewness adjusted t-test is employed to test the statistical
significance of candlesticks’ profitability. After taking into account the
transaction costs, sub-sample, and out-of-sample test, the findings show
that only Falling Window pattern after a prevailing downtrend shows
predictive power with bearish signals indicated significantly during the 5-
day holding period. |
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