THE ACCURACY OF TECHNICAL ANALYSIS IN PREDICTING STOCK PRICE

Abstract

Technical analysis has been used publicly by market participant to analyze the stock price to forecast the stock price in near future. It was done by equity researcher and the result of technical analysis is the prediction of the stock price for next day with the recommendation from equity researcher (buy, hold, sell). The issue is the result of technical analysis which is foresight of stock price for tomorrow can be wrong and leads to take wrong recommendation. This paper tests the technical analysis in predicting the stock price and companies in LQ45 become as sample. The result shows the technical analysis can be used in predicting the stock price. However, the researcher give recommendation to not fully used technical analysis itself. The researcher recommends to do fundamental analysis in order to consider fundamental aspect such as macroeconomy, industry overview, company’s performance, etc.