Which of the following is not true about technical analysis?
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A. B. C. D.B
Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. The goal of technical analysis is to identify patterns and trends that may be indicative of future price movements, allowing traders to make informed decisions about when to buy or sell a security. Here are the explanations for each of the given options:
A. It requires some subjective decision making: This statement is true. Technical analysis involves the interpretation of charts and other graphical representations of market data. This interpretation often requires subjective decision-making by the analyst, such as determining the significance of a particular pattern or trend.
B. Its success would mean markets are not efficient: This statement is also true. The efficient market hypothesis (EMH) states that financial markets are always fully reflecting all available information, and that it is impossible to consistently outperform the market by using any information that the market already knows. Technical analysis suggests that market trends and patterns can be used to predict future price movements, which contradicts the EMH.
C. Technical analysis is older than fundamental analysis: This statement is not true. Fundamental analysis, which involves the evaluation of a company's financial health and economic factors to determine its intrinsic value, has been used for centuries. In contrast, technical analysis has only been used since the late 19th century.
D. None of these: Since statement C is not true, the correct answer is D. None of these.