Do Predictive Power of Fibonacci Retracements Help the Investor to Predict Future? A Study of Pakistan Stock Exchange

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There are number of ways like Technical Analysis, Fundamental Analysis and The Efficient Market Hypothesis that helps to know the behaviour of investor which helps to predict future. In this study author used Fibonacci numbers/series analysis which consider for forecasting future stock prices trends. For the purpose of this study four listed companies are selected at random by convenience sampling from Cement Sector for the period of 1st quarter of 2017. Closing prices of open days of market are taken from Karachi Stocks and graphs are made. This study concluded that in four companies of cement sector, there were total 63 support levels out of which 17 (27%) and total 66 resistance level from which 24 (36%) were followed Fibonacci retracements. So the study findings accept the hypothesis that the trend reversals in Cement sector listed in PSX follow Fibonacci retracements to some extent. Analysis of this study showed that there is at least one strong support and one strong resistance in every company and some small resistant and support levels.

Everyinvestor wants to get more return on his investments and to get each and every opportunity by mean of which he can get more return on his stock. So while making investments in any stock, investors want to make some predictions regarding their investments by analyzing the trends of a particular stock that it would be profitable for them to making investment in a particular stock in future or not?. For this purpose there are many ways to analysis the behaviour of investors like Technical Analysis, Fundamental Analysis and The Efficient Market Hypothesis through which future predictions can be made while investing in any stock.

Technicalanalysis indicates the previous stock price values by using the charts, graphs which shows to different trends and investors behaviour about the price fluctuations of financial instruments. In the period of 1981-1995, the stock prices strong and weak return indications were analyzed by the mean of technical analysis generic. Programming to provide information regarding six exchange rates trends to investor for their future investments.