'Technical Analysis has several supporters as well several critics.' In this context state the favourable and unfavourable arguments of Technical…

(a) Favourable arguments for Technical Analysis are as follows: (a) Under influence of crowd psychology trend persist for some time. Tools of technical analysis help in identifying these trends early and help in investment decision making. (b) Shift in demand and supply are gradual rather than instantaneous. Technical analysis helps in detecting this shift rather early and hence provides clues to future price movements. (c) Fundamental information about a company is observed and assimilated by the market over a period of time. Hence price movement tends to continue more or less in same direction till the information is fully assimilated in the stock price. Unfavorable arguments for Technical Analysis are as follows: (a) Most technical analysts are not able to offer a convincing explanation for the tools employed by them. (b) Empirical evidence in support of random walk hypothesis cast its shadow over the usefulness of technical analysis. (c) By the time an uptrend and down trend may have been signalled by technical analysis it may already have taken place. (d) Ultimately technical analysis must be a self-defeating proposition. With more and more people employing it, the value of such analysis tends to decline.