Abstract:
It is documented that technical analysis is a highly persuasive activity among the stock traders in Pakistan. This paper highlights that whether technical analysis is of importance for the stock traders in Pakistan or not. In Pakistan, very little work has been done before in stock market. Still very commonly used econometrics models have not been tested in our markets. This paper uses five year data on weekly stock prices of ten top weight age companies listed in Karachi stock exchange to examine the usefulness of technical analysis through vector auto regression (VAR) approach. Results proved that there is a very week support
for the technical analysis in Pakistan as most of the companies showed insignificant relationship between their past prices and future price, thus results cast doubt on the ability of technical analysis to predict future price movement in Pakistan's stock market.
