Evaluation Of Technical and Fundamental Analysis From Behavioral Finance Perspective

Prediction of price behavior is one of the most remarkable and the most curious subjects in the finance literature.  Many methods are used to predict the price behavior.  Technical and fundamental analysis are commonly used method in the market.  On the other hand, there is a important role of efficient markets hypothesis in finance literature which assumes the price can not be predicted systematically. However, with the begining of the twenty-first century, the intellectual dominance of the efficient markets hypothesis has begun to move away from universalism. Many financial economists and statisticians have begun to believe that stock prices could be at least partially predicted. The new generation of economists draw attention the presence of behavioral and psychological elements to predict the stock prices and believe that future stock prices could be estimated based on past price movements.

This theoretical study aims to evaluate that the relationship between technical and fundamental analysis which are used to predict the price behavior, criticism within the scope of the efficient markets hypothesis for these analyzes and the validity of criticism by using behavioral finance perspective.