Is there any good statistical data on Technical Analysis Patterns?

[watkins]

Hi,

First post on this site. I've been trading stocks/options for a few years with mixed success. I've read up a lot on technical analysis, but have always been frustrated with a couple of aspects - first, unclear rules for identifying patterns, even simple things such as support and resistance. Second, a lack of statistical evidence supporting the use of those patterns. It seems to me that something like a 'descending triangle', for example, can be defined mathematically and subsequently backtested. From this, you could derive some statistics on the pattern's effectiveness. Can anyone provide a good resources for this kind of thing?

watkins

 

[counter_violent]

http://thepatternsite.com/

 

[tar]

Hi,

First post on this site. I've been trading stocks/options for a few years with mixed success. I've read up a lot on technical analysis, but have always been frustrated with a couple of aspects - first, unclear rules for identifying patterns, even simple things such as support and resistance. Second, a lack of statistical evidence supporting the use of those patterns. It seems to me that something like a 'descending triangle', for example, can be defined mathematically and subsequently backtested. From this, you could derive some statistics on the pattern's effectiveness. Can anyone provide a good resources for this kind of thing?

watkins

Very good question , no AFAIK there is no statistical evidence to support patterns profitability , just examples from historical charts "cherry picking" , IMHO i don't believe the competitiveness in the markets will allow such a profitable pattern to exist , but it is good to learn them and to add them to your trading arsenal .

 

[the hare]

Evidence based technical analysis by David Aronson is worth a read. It doesn't contain any data, but at least it might give a better understanding of the problems you'll encounter if you go down this route

 

[new_trader]

Encyclopedia of Chart Patterns is a book I wasted my money on. You might find it useful though. It is full of pictures and statistics.

http://www.risk-management.cz/pictures/encyclopediaofchartpatterns.jpg

 

[Shakone]

Brock et al (1992) seems to be referred to quite a lot in the literature.

Google: empirical evidence of technical analysis for example. There's a great deal of academic literature for and against.