IN DEFENSE OF TECHNICAL ANALYSIS OF STOCK MARKET BEHAVIOUR

¹Henry O. Osazevbaru and ²Felix Enaibre Ighosewe

¹Department of Accounting, Delta State University, Abraka Nigeria

²Department of Accountancy, Delta State Polytechnic Ozoro, Nigeria

E-mail: felixighosewe@yahoo.com

ABSTRACT

Adherents of efficient market theory have historically dismissed technical analysis because of its perceived inconsistency, with their theory. They tend to give support to fundamental analysis as an alternative tool for analyzing stock market behaviour. This paper shows that there  is actually no disagreement between efficient market theory and technical analysis at least from empirical studies and that both can co-exist. It provides a theoretical framework to rationalize the use of technical analysis and brought out the shortcomings of fundamental analysis which its supporters (the academics) have consistently ignored.