Investigating profitability of Technical Trading Rules around COVID pandemic: Evidence from PSX

Authors

  • Hammad Hassan Mirza Malik Firoz Khan Noon Business School, University of Sargodha
  • Fatima Razzaq MS Scholar, Malik Firoz Khan Noon Business School, University of Sargodha, Sargodha
  • Ghulam Ali Bhatti MFK Noon Business School, University of Sargodha, Sargodha, Pakistan.
  • Haroon Hussain MFK Noon Business School, University of Sargodha, Sargodha, Pakistan.

DOI:

https://doi.org/10.62533/bjmt.v7i2.105

Keywords:

Technical indicators, Covid 19, MACD, RSI, BB, MFI

Abstract

This paper investigates the role of technical analysis in predicting the stock prices of listed companies on the Pakistan Stock Exchange (PSX). Technical indicators such as Moving Average Convergence/Divergence (MACD), Relative Strength Index (RSI), Bollinger Bands (BB), and Money Flow Index (MFI) are evaluated to explore their significance for stock gains in the Pakistan Stock Exchange. For this purpose, daily price data from 29 companies listed on the PSX was collected during the period from 2018 to 2022. This sample period provides a unique opportunity to analyze the impact of Covid-19 on the accuracy of technical trading signals. MACD, RSI, BB, and MFI are calculated, and the accuracy of the results is then assessed. Evidence from the PSX highlights that these indicators perform differently across various sectors. The t-test outcomes indicate significant differences in results before and after Covid-19, emphasizing the impact of the pandemic on stock movements. Based on these results an index has been developed and proposed to aid future decision-making processes.

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Published

2024-06-30

Issue

Vol. 7 No. 2 (2024): BAHRIA UNIVERSITY Journal of Management and Technology (BJMT)

Section

Articles