How Would Technical Analysis Be Viewed under the Weak Form of the Efficient Market Hypothesis?
Under the weak form of the Efficient Market Hypothesis, technical analysis is considered to be completely useless. The weak-form EMH states that all past price and volume data is already fully reflected in the current market price.
Since technical analysis is based entirely on identifying patterns and trends in this historical data to predict future price movements, the hypothesis implies that it cannot offer any advantage. According to weak-form EMH, there is no discernible pattern in past price movements that can be used to consistently generate excess returns.
Glossar
Efficient
Allocation ⎊ Efficient resource deployment within cryptocurrency derivatives hinges on minimizing transaction costs and maximizing capital utilization across various strategies.
Efficient Market
Market ⎊ The concept of an efficient market, particularly within cryptocurrency, options, and derivatives, posits that asset prices fully reflect all available information.
Technical
Analysis ⎊ Within cryptocurrency derivatives and options trading, technical analysis transcends mere chart pattern recognition; it represents a structured, data-driven approach to forecasting price movements predicated on historical market data and volume.
Technical Analysis
Chart ⎊ Technical analysis, within the context of cryptocurrency, options, and derivatives, fundamentally relies on the visual interpretation of price movements and related data displayed on charts.