A fuzzy perspective towards technical analysis-case study of trend prediction using moving averages
M.H. Lim, D. Wuncsh · 1999
Chartists usually rely on technical indicators to predict trends in time series charts. Although the indicators are precise and most practitioners tend to concur to a large extent on the general meaning of the indicators, it is hard to specify precise thresholds as a basis for deciding on a particular course of action. Probabilistic based approaches do offer recourse for handling such kinds of uncertainty. However, a probabilistic mode of managing uncertainty lacks the flair for capturing the essence of subjectivity that unfortunately (or fortunately) is an inherent trait of human chartists. Fuzzy logic therefore offers a better alternative in this sense. It is further suggested that the fuzzy knowledge can be tuned by means of various existing learning algorithms to accommodate the needs of the chartists.