"The popularity of technical analysis is a clear rejection of the Efficient Market Hypothesis". Using examples,...

"The popularity of technical analysis is a clear rejection of the Efficient Market Hypothesis".

Using examples, discuss whether you agree with this statement.

Expert Solution

The popularity of technical analysis is a clear rejection of the Efficient Market Hypothesis
I disagree with this statement.
The technical market analysis takes the past data to establish future price movements. The Efficient Market Hypothesis takes that the markets always have a potential that is based on the availability of information and have the potential to exceed the returns of the technical analysis as it’s based on realistic data. Hence the availability of information and rationality of the markets are taken in the Efficient Market Hypothesis which is absent in technical market analysis. The technical market analysis is informative but does not have the basis on which the current market details can be availed. This doesn’t show the market conditions like the economy of the market, the substitutes for a product like aspects which are important to decide the market efficiency with past 5 years data since the 6th year may be different. The efficient market hypothesis takes in the available information based on realistic data so it has the strength to exceed the technical analysis data.

keosha answered 5 months ago

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