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Support for resistance: technical analysis and intraday exchange rates

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Abstract

?Support? and ?resistance? levels?points at which an exchange rate trend may be interrupted and reversed?are widely used for short-term exchange rate forecasting. Nevertheless, the levels? ability to predict intraday trend interruptions has never been rigorously evaluated. This article undertakes such an analysis, using support and resistance levels provided to customers by six firms active in the foreign exchange market. The author offers strong evidence that the levels help to predict intraday trend interruptions. However, the levels? predictive power is found to vary across the exchange rates and firms examined.

Suggested Citation

  • Carol L. Osler, 2000. "Support for resistance: technical analysis and intraday exchange rates," Economic Policy Review, Federal Reserve Bank of New York, issue Jul, pages 53-68.
    • Handle: RePEc:fip:fednep:y:2000:i:jul:p:53-68:n:v.6no.2
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    Keywords

    Foreign exchange rates; Forecasting;

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