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Will History Repeat Itself? Empirical Research on A-Share Candlesticks in China Based on Matching Method

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  • Huadong Chang
  • Guozhi An

Abstract

This paper analyzes the predictability and profitability of the candlesticks strategy, which is the most basic type of technical analysis in China's stock market. By analyzing matched candlesticks samples most similar to the candlesticks of the current stocks in the past six months, we can buy the portfolios best in performance and sell the worst to obtain significant excess returns. The result keeps robust after risk adjustment. This paper verifies the rationality of the third hypothesis of technical analysis and shows that technical analysis has its own value of existence and outlook of growth. JEL Classification Numbers: G11, G12, G14Keywords: Matching Method; Candlesticks; Technical Analysis Hypothesis; Financial Market Anomalies

Suggested Citation

  • Huadong Chang & Guozhi An, 2019. "Will History Repeat Itself? Empirical Research on A-Share Candlesticks in China Based on Matching Method," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(5), pages 1-8.
    • Handle: RePEc:spt:apfiba:v:9:y:2019:i:5:f:9_5_8
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    References listed on IDEAS

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    More about this item

    Keywords

    matching method; candlesticks; technical analysis hypothesis; financial market anomalies;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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