[-] "While the preliminary evidence is discouraging to chart advocates, nevertheless we would be the first to admit that our studies may be deficient in several respects--some of which may be important."
Levy (1971)
"Chartists are the people the academics love to hate. [...] [T]he interested reader should refer to the standard book by Edwards and Magee (1984) or a long article by Shawe (1988). An old, but still worthwhile review of the evidence, was made by Pinches (1970)."
Lofthouse (1994)
[+] "In this paper, we propose a systematic and automatic approach to technical pattern recognition using nonparametric kernel regression, and we apply this method to a large number of U.S. stocks from 1962 to 1996 to evaluate the effectiveness of technical analysis. By comparing the unconditional empirical distribution of daily stock returns to the conditional distribution--conditioned on specific technical indicators such as head-and-shoulders or double-bottoms--we find that over the 31-year sample period, several technical indicators do provide incremental information and may have some practical value."
Lo, Mamaysky and Wang (2000)
"Pattern modelling in time-series prediction refers to the process of identifying past relationships and trends in historical data for predicting future values. This paper describes the development of a new pattern matching technique for univariate time-series forecasting. The pattern modelling technique out-performs frequently used statistical methods such as Exponential Smoothing on different error measures and predicting the direction of change in time-series. The paper discusses the prediction results on popular benchmarks and the real US S&P index for financial markets."
Singh (2000)
[+] "We implement a graphical (or ‘charting’) heuristic, the ‘bull flag’, which accepts a particular pattern of historical prices as a signal for a future market price increase, test it with several years of New York Stock Exchange Composite Index history, and find positive results. The results support the validity of technical analysis for stock market price prediction and fail to confirm the efficient markets hypothesis." Leigh, Paz and Purvis (2002)
Leigh, Paz and Purvis (2002)
[+] bull flag, NYSE Composite Index
"Out-of-sample results indicate that these rules are effective."
Leigh et al. (2002)
On the Existence of Visual Technical Patterns in the UK Stock Market
Edward R. Dawson and James M. Steeley
"The aim in this paper is to replicate and extend the analysis of visual
technical patterns by Lo et al. (2000) using data on the UK market. A
nonparametric smoother is used to model a nonlinear trend in stock price
series. Technical patterns, such as the 'headandshoulders' pattern, that are
characterised by a sequence of turning points are identified in the smoothed
data. Statistical tests are used to determine whether returns conditioned on
the technical patterns are different from random returns and, in an extension
to the analysis of Lo et al. (2000), whether they can outperform a market
benchmark return. For the stocks in the FTSE 100 and FTSE 250 indices over the
period 1986 to 2001, we find that technical patterns occur with different
frequencies to each other and in different relativities to the frequencies
found in the US market. Our extended statistical testing indicates that UK
stock returns are less influenced by technical patterns than was the case for
US stock returns."