Abstract:

Technical analysis is one of the most popular tools that is used to predict future price movements of financial instruments. The aim of our contribution is to examine the possibilities of using technical analysis as a basic tool for managing business decisions in the financial market trading in the conditions of the Slovak Republic. In our work, we have developed a brief overview of the historical development of technical analysis and its use in the past and we have also summarized the current state of scientific knowledge in the field of technical analysis. The main added value of our contribution is that we have demonstrated through the build-up of the trading system and its application that technical analysis can serve as a fully-fledged basis for a consistently profitable trading system in condition of Slovak Republic. Based on our research, we can argue that technical analysis, despite not having much support in scientific circles, can be a valuable tool in building a trading system. It is likely to be able to predict the price movements of some financial instruments, and it can give the entity that uses these techniques a certain statistical advantage, but the size of which affects other aspects of the trading system as well as the human factor. Finally, we can say that even in a country with no stock exchange tradition like the Slovak Republic, this tool can be successfully used to predict future price movements.