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Technical analysis and the London stock exchange: testing the MACD and RSI rules using the FT30


  • Terence Tai-Leung Chong
  • Wing-Kam Ng


This article examines two oscillators - the Moving Average Convergence-Divergence (MACD) and the Relative Strength Index (RSI) - to see if these rules are profitable. Using 60-year data of the London Stock Exchange FT30 Index, it is found that the RSI as well as the MACD rules can generate returns higher than the buy-and-hold strategy in most cases.

Suggested Citation

  • Terence Tai-Leung Chong & Wing-Kam Ng, 2008. "Technical analysis and the London stock exchange: testing the MACD and RSI rules using the FT30," Applied Economics Letters, Taylor & Francis Journals, vol. 15(14), pages 1111-1114.
  • Handle: RePEc:taf:apeclt:v:15:y:2008:i:14:p:1111-1114 DOI: 10.1080/13504850600993598

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    References listed on IDEAS

    1. Mark Roberts, 2004. "The Growth Performances of the GB Counties: Some New Empirical Evidence for 1977-1993," Regional Studies, Taylor & Francis Journals, vol. 38(2), pages 149-165.
    2. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-1152, December.
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    3. Helmut Hofer & Andreas Worgotter, 1997. "Regional Per Capita Income Convergence in Austria," Regional Studies, Taylor & Francis Journals, vol. 31(1), pages 1-12.
    4. M. Chatterji & J. H. Ll. Dewhurst, 1996. "Convergence Clubs and Relative Economic Performance in Great Britain: 1977-1991," Regional Studies, Taylor & Francis Journals, vol. 30(1), pages 31-39.
    5. Andrew Henley, 2005. "On regional growth convergence in Great Britain," Regional Studies, Taylor & Francis Journals, vol. 39(9), pages 1245-1260.
    6. Scherer, F M, 1992. "Schumpeter and Plausible Capitalism," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1416-1433, September.
    7. Paul Bishop & Peter Gripaios, 2004. "Earnings biases and convergence in the UK: a county level analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 11(1), pages 33-37.
    8. Peter Gripaios & Paul Bishop & Sarah Keast, 2000. "Differences in GDP per head in GB counties: some suggested explanations," Applied Economics, Taylor & Francis Journals, vol. 32(9), pages 1161-1167.
    9. John Dewhurst & Philip McCann, 2007. "Specialization and Regional Size," Chapters,in: New Directions in Economic Geography, chapter 7 Edward Elgar Publishing.
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    Cited by:

    1. Ülkü, Numan & Prodan, Eugeniu, 2013. "Drivers of technical trend-following rules' profitability in world stock markets," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 214-229.
    2. Buncic, Daniel & Piras, Gion Donat, 2016. "Heterogeneous agents, the financial crisis and exchange rate predictability," Journal of International Money and Finance, Elsevier, vol. 60(C), pages 313-359.
    3. Abdorrahman Haeri & Masoud Rabbani & Ali Habibnia, 2011. "The Proposed Mathematical Models for Decision-Making and Forecasting on Euro-Yen in Foreign Exchange Market," Iranian Economic Review, Economics faculty of Tehran university, vol. 16(3), pages 67-91, fall.
    4. Urquhart, Andrew & Gebka, Bartosz & Hudson, Robert, 2015. "How exactly do markets adapt? Evidence from the moving average rule in three developed markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 38(C), pages 127-147.
    5. Michael McAleer & John Suen & Wing Keung Wong, 2016. "Profiteering from the Dot-Com Bubble, Subprime Crisis and Asian Financial Crisis," The Japanese Economic Review, Japanese Economic Association, vol. 67(3), pages 257-279, September.
    6. Terence Tai-Leung Chong & Wing-Kam Ng & Venus Khim-Sen Liew, 2014. "Revisiting the Performance of MACD and RSI Oscillators," Journal of Risk and Financial Management, MDPI, Open Access Journal, vol. 7(1), pages 1-12, February.
    7. Terence Tai-Leung Chong & Chen Li & Ho Tin Yu, 2008. "Structural Change in the Stock Market Efficiency after the Millennium: The MACD Approach," Economics Bulletin, AccessEcon, vol. 7(12), pages 1-6.
    8. Kim man Lui & Terence T. L. Chong, 2013. "Do Technical Analysts Outperform Novice Traders: Experimental Evidence," Economics Bulletin, AccessEcon, vol. 33(4), pages 3080-3087.
    9. repec:ebl:ecbull:v:7:y:2008:i:12:p:1-6 is not listed on IDEAS
    10. Bai, Limiao & Yan, Sen & Zheng, Xiaolian & Chen, Ben M., 2015. "Market turning points forecasting using wavelet analysis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 437(C), pages 184-197.
    11. repec:eee:reveco:v:53:y:2018:i:c:p:168-184 is not listed on IDEAS
    12. Gerritsen, Dirk F., 2016. "Are chartists artists? The determinants and profitability of recommendations based on technical analysis," International Review of Financial Analysis, Elsevier, vol. 47(C), pages 179-196.

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