Does Technical Analysis Actually Work On Small-Cap Stocks?
Technical analysis is used by a lot of investors to look for potential companies to invest in to begin with, and then for timing entry and exit points. However is it such an effective tool when investing in small-cap stocks? Well in my opinion technical analysis unquestionably works best when it is applied to mid and large-cap stocks. This is because they are much more widely traded and so any patterns that emerge on their respective charts are often spotted and acted upon by lots of other traders as well. Plus there is also the fact that these stocks are often stuck in established trading ranges for long periods of time, so it’s very easy to use technical analysis to find overbought and oversold set-ups within these trading ranges. The resulting price moves are often predictable and therefore profitable to trade, and in a way become self-fulfilling because many other investors will buy at the same kind of levels where there is historical support, and sell at established resistance lev
Related Questions
- I have been investing in stocks using fundamental analysis, how would technical analysis help me in taking better decisions as compared to fundamental analysis ?
- Is it possible to forecast future price of stocks and indices by technical analysis method?
- Is technical analysis concerned with stocks being overvalued/undervalued?
