A Country That Relies on Technical Analysis for Forecasting Exchange

question 83

Multiple Choice

A country that relies on technical analysis for forecasting exchange rate movements would know that

• A) price and volume data cannot be used to determine past trends.
• B) econometric models drawn from economic theory are best suited to predict exchange rate movements.
• C) the foreign exchange market is efficient and forward exchange rates are the best predictors of future spot exchange rates.
• D) previous market trends and waves can be used to predict future market trends and waves.
• E) since forward exchange rates are the best predictors of future spot rates, it makes no sense to invest in forecasting.