Which of the following is an assumption of technical analysis?
Click on the arrows to vote for the correct answer
A. B. C. D. E.B
Technical analysis is primarily grounded on three major assumptions - (1.) the market value of any good is determined solely by supply and demand, (2.) supply and demand fluctuations are caused by both rational and irrational factors, and (3.) the prices of individual securities and securities markets move in trends, i.e. securities markets "price-in" information slowly. The third assumption of technical analysis negates any belief in the weak form efficient market hypothesis, which assumes that past performance data cannot be used to predict securities prices, and that the securities markets "price-in" information instantly. This
"incongruence" with all forms of the EMH is cited as the greatest criticism of technical analysis.