Study of Short-Term Price Prediction with K-Line and SMA for Electrical Stocks in Taiwan

In the past two decades, many studies in Taiwan devoted to investigate the impact of technical analysis on stock price predictions and on stock trading strategies. Most of these studies focused on the analysis of price indicators, and only a few on stock graphical analysis indicators. In addition, although quite a few studies also adopted combined signals (using two or more technical analysis indicators at the same time) as stock price prediction indicators, price indicators still play the most part in their research. Our study will adopt the combined signal approach that center on K-line technical indicator (a type of stock graphical analysis), and supplemented by Simple Moving Average (SMA, a type of price indicator) to predict the rising and falling of stock price in the hope of helping investors find opportunities to gain more than 1.56% net profit within a month. Our study collected and examined daily trading data of individual stocks from the Taiwan Stock Exchange (TWSE) ranging from 2012 to 2021 and targeted at the Electrical Industry (TWSE Stock Group No. 13) with a total of 420 stocks. The research results show that the combined signal approach composed of the key K-line and the Simple Moving Average (SMA) yields a higher return on investment than single signal approaches, and can be used to signal investors to enter the market creating true profit for themselves.