Target 85 cents next 2 weeks!, page-38

First watch this video where Michael Rechenthin, Ph.D backtests 30 years of data for all stocks in the S&P 500

https://www.tastytrade.com/tt/shows...des/backtesting-technical-analysis-07-15-2015

The result? Using technical analysis under-performed the "buy and hold" strategy by a large margin.

Now you might say "oh but they only used moving averages and not flags/pennants/head and shoulders/cup and handle/etc. But the nature of charts is that those things are all subjective. Anyone can look into the tea leaves and see whatever pattern they want when zooming in and out on different time frames.

This is mentioned by Dr. Andrew Low in the study that is probably the most supportive of Technical Analysis (that I could find):

"One of the main obstacles is the highly subjective nature of technical analysis – the presence of geometric shapes in historical price charts is often in the eyes of the beholder. In this paper, we propose a systematic and automatic approach to technical pattern recognition using nonparametric kernel regression, and apply this method to a large number of U.S. stocks from 1962 to 1996 to evaluate the effectiveness of technical analysis. By comparing the unconditional empirical distribution of daily stock returns to the conditional distribution – conditioned on specific technical indicators such as head-and-shoulders or double-bottoms – we find that over the 31-year sample period, several technical indicators do provide incremental information and may have some practical value.^[51]"

Not that convincing, to say the least.
This study by Amsterdam economist Gerwin Griffioen is slightly less supportive:

"for the U.S., Japanese and most Western European stock market indices the recursive out-of-sample forecasting procedure does not show to be profitable, after implementing little transaction costs. Moreover, for sufficiently high transaction costs it is found, by estimating CAPMs, that technical trading shows no statistically significant risk-corrected out-of-sample forecasting power for almost all of the stock market indices."^[16] Transaction costs are particularly applicable to "momentum strategies"; a comprehensive 1996 review of the data and studies concluded that even small transaction costs would lead to an inability to capture any excess from such strategies.^[50]

I think that due to the subjective nature of charting, we'll never be able to say with 100% certainty whether it works or not. But any individual trader who believes they can consistently beat the market could quite easily go to an independent researcher and prove it using back testing. So far (as far as I know) no one has.