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Support for Resistance: Technical Analysis and Intraday Exchange Rates

16 Pages Posted: 7 Mar 2006  

Carol L. Osler

Brandeis University - International Business School

Abstract

"Support" and "resistance" levels - points at which an exchange rate trend may be interrupted and reversed - are widely used for short-term exchange rate forecasting. Nevertheless, the levels' ability to predict intraday trend interruptions has never been rigorously evaluated. This article undertakes such an analysis, using support and resistance levels provided to customers by six firms active in the foreign exchange market. The author offers strong evidence that the levels help to predict intraday trend interruptions. However, the levels' predictive power is found to vary across the exchange rates and firms examined.

Keywords: exchange rates, tecnhical analysis, high-frequency, bootstrap, support, resistance

JEL Classification: F31, G12, G14

Suggested Citation

Osler, Carol L., Support for Resistance: Technical Analysis and Intraday Exchange Rates. Economic Policy Review, Vol. 6, No. 2, July 2000. Available at SSRN: https://ssrn.com/abstract=888805

Carol L. Osler (Contact Author)

Brandeis University - International Business School ( email )

Mailstop 32
Waltham, MA 02454-9110
United States
781-736-4826 (Phone)

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