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Enhancing Investment Profitability: Study on Contrarian Technical Strategies in Brent Crude Oil Markets

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Listed:
  • Paoyu Huang

    (Department of International Business, Soochow University, Taipei 100006, Taiwan)

  • Yensen Ni

    (Department of Management Sciences, Tamkang University, New Taipei 251301, Taiwan)

  • Min-Yuh Day

    (Graduate Institute of Information Management, National Taipei University, New Taipei 237303, Taiwan)

  • Yuhsin Chen

    (Department of Accounting, Chung Yuan Christian University, Taoyuan 320314, Taiwan)

Abstract

In the context of heightened oil price volatility, mastering technical trading strategies is essential for informed investment and sound decision making. This study explores the effectiveness of contrarian technical trading strategies in the Brent crude oil market, aiming to enhance returns in the face of persistent market fluctuations. Utilizing historical price data, this research formulates trading rules based on overbought and oversold signals derived from the Relative Strength Index (RSI) and the Stochastic Oscillator Indicator (SOI). It assesses their performance through a range of Average Holding Period Return (AHPR) metrics, emphasizing the 250-day AHPR as a proxy for one-year returns. The findings show that RSI-based strategies, especially those using a threshold of 25, are most effective in oversold conditions, achieving peak profitability of over 40% in Quarter 2. The conclusions highlight the importance of parameter flexibility, strategic timing, and responsiveness to market dynamics in optimizing the contrarian strategy performance. The implications suggest investors and managers can refine strategies by accounting for behavioral biases, market timing, and flexible parameters, while enhancing big data analytics in technical trading.

Suggested Citation

  • Paoyu Huang & Yensen Ni & Min-Yuh Day & Yuhsin Chen, 2025. "Enhancing Investment Profitability: Study on Contrarian Technical Strategies in Brent Crude Oil Markets," Energies, MDPI, vol. 18(11), pages 1-19, May.
    • Handle: RePEc:gam:jeners:v:18:y:2025:i:11:p:2735-:d:1663766
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