The Predictive Significance of Five-Point Chart Patterns

Levy, Robert A.

doi:10.1086/295382

Cited by 55 publications

(34 citation statements)

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“…The claim by technical analysts of the presence of geometric shapes in historical price charts is often criticized as being too subjective, intuitive or even vague. Levy (1971) was the first to examine 32 possible forms of five point chart patterns, i.e. a pattern with two highs and three lows or two lows and three highs, which are claimed to represent channels, wedges, diamonds, symmetrical triangles, (reverse) head-and-shoulders, triple tops, and triple bottoms.…”

Section: Pattern Recognitionmentioning

confidence: 99%

Technical Analysis in Financial Markets

Hommes

Griffioen

2003

SSRN Journal

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Section: Pattern Recognitionmentioning

confidence: 99%

Technical Analysis in Financial Markets

Hommes

Griffioen

2003

SSRN Journal

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“…There is, however, some work published which contains systematic analysis of technical patterns. Levy (1971) tests the pro tability of a number of '5-point' chart patterns but nds no evidence of forecasting ability and Neftci (1991) considers the problem of hindsight when analysing trading patterns and indicators. Osler and Chang (1998), and Osler (1995) test the head and shoulders pattern on a number of FX and stock markets and nd statistically signi cant pro ts in some markets.…”

Section: Introductionmentioning

confidence: 99%

Can channel pattern trading be profitably automated?

Dempster¹

2002

The European Journal of Finance

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Financial markets, such as the global foreign exchange (FX) market, often exhibit trending behaviour. Within such trends, the market level oscillates with changes in market consensus. Continued oscillations of this type result in the formation of wave patterns within the underlying trend known as channels, which are used by technical analysts as trade entry signals. A sample space of such channels has been constructed from a set of US dollar/British pound Spot FX tick data from 1989-1997 using pattern recognition algorithms and the profitability of trading using such patterns has been estimated. A number of attributes of the resulting collection of channels has been subjected to statistical analysis with the aim of classifying patterns that can be traded profitably using a number of simple trading rules. Results of this analysis show that there exist statistically significant links between the channels' attributes and profitability.Technical Analysis, Technical Trading, Currency Trading, Intra, High Frequency Financial Data, Multivariate Discriminant Analysis, Pattern Recognition,

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“…Similarly, a share moving down on large turnover implies a sell signal. Levy (1971), in a study of the usefulness of chartist patterns, found no predictive significance in five point charts.…”

Section: §5 Implications For Investment Theorymentioning

confidence: 96%

Random Walks and Investment Theory

Praetz¹

1973

JIS

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This article discusses the random walk hypothesis, examines some of the evidence that has been put forward to support it, and draws some implications for the theory of investment analysis. There seem to be only three references to the random walk hypothesis in U.K. actuarial literature—Weaver and Hall (1967), Hemstead (1969) and Moore (1972), all of whom discuss it very briefly. The vast majority of the research in share prices, portfolio analysis, etc. has been performed in the U.S.A., but this article will attempt to discuss this problem in the light of current U.K. research, as well as its application to maturity guarantees for equity-linked policies.

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The Predictive Significance of Five-Point Chart Patterns

Cited by 55 publications

References 0 publications

Technical Analysis in Financial Markets

Technical Analysis in Financial Markets

Can channel pattern trading be profitably automated?

Random Walks and Investment Theory

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