Whether technical analysis actually works is a matter of controversy. Methods vary greatly, and different technical analysts can sometimes make contradictory predictions from the same data. Many investors claim that they experience positive returns, but academic appraisals often find that it has little predictive power.
Modern studies may be more positive: of 95 modern studies, 56 concluded that technical analysis had positive results, although data-snooping bias and other problems make the analysis difficult.
Nonlinear prediction using neural networks occasionally produces statistically significant prediction results.
A Federal Reserve working paper regarding support and resistance levels in short-term foreign exchange rates
"offers strong evidence that the levels help to predict intraday trend interruptions,"although the
"predictive power"
of those levels was
"found to vary across the exchange rates and firms examined".
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