Technical Analysis: Astrology for Men?

okt. 04, 2023

Swedish House of Finance's Riccardo Sabbatucci, Associate Professor in the Department of Finance at the Stockholm School of Economics, discussed Technical Analysis with Swedish financial economics podcast, Kapitalet.

Technical analysis is a method in finance to predict asset prices by analyzing historical data, but critics liken it to “astrology for men” due to concerns about its lack of empirical evidence, subjectivity, and overemphasis on patterns.

"It’s highly unlikely that chartists or technical analysts are able to decipher or understand any market dynamics of sophisticated investors. Sophisticated investors usually know how to trade, to avoid what is called, ‘market impact’ or ‘price impact’. So, looking at patterns, especially in one single stock or single index is very, very hard to understand any pattern," Sabbatucci says.