Technical Analysis in the Stock Market: A Review

Technical analysis is the study of forecasting future asset prices with past data. In this survey, we review and extend studies on not only the time-series predictive power of technical indicators on the aggregated stock market and various portfolios but also the cross-sectional predictability with various firm characteristics. While we focus on reviewing major academic research on using traditional technical indicators, we also discuss briefly recent studies that apply machine learning approaches, such as lasso, neural network, and genetic programming, to forecast returns both in the time series and on the cross section.