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When support/resistance levels are broken, can profits be made? Evidence from the foreign exchange market

Curcio, Riccardo and Goodhart, C. A. E. (1992) When support/resistance levels are broken, can profits be made? Evidence from the foreign exchange market. Financial Markets Group Discussion Papers (142). Financial Markets Group, The London School of Economics and Political Science, London, UK.

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Abstract

We investigate on three exchange rate series the profitability of signals generated by the breaking of levels of support and resistance identified and supplied by Chartists. Such profitability is assessed, and then compared to ones obtained with other technical rules. We confirm previous findings that trading range breaks do generate profitable signals, even after the inclusion of transaction costs, and we show that signals generated using Chartists inputs are more frequent and profitable. Supports and resistances may work by warning traders against holding currencies subject to adverse trends.

Item Type: Monograph (Discussion Paper)
Official URL: https://www.fmg.ac.uk/
Additional Information: © 1992 The Authors
Divisions: Financial Markets Group
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
JEL classification: E - Macroeconomics and Monetary Economics > E0 - General > E00 - General
F - International Economics > F0 - General > F00 - General
Date Deposited: 17 May 2023 23:07
Last Modified: 16 May 2024 12:30
URI: http://eprints.lse.ac.uk/id/eprint/119184

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