The profitability of technical analysis varies greatly across national stock markets as the propensity of investors to herd differs from country to country, according to a report by Jiali Fang at Massey University in New Zealand.
Testing 26 technical strategies, including moving average and breakout rules across 50 stock markets from 1994 to 2014, the research shows varying degrees of profitability in trading using these techniques. The differences across countries is attributed largely to investor individualism (propensity to herd) but also to the degree of stock market development and information uncertainty. More herding causes trends and so the more effective is the use of technical analysis. The same applies to markets that are less developed and suffer from a greater degree of information uncertainty.
In order to estimate the degree of herding within a particular market, the study uses the Hofstede cultural individualism index as a proxy herding index. Out of 50 countries, the index places the US as the most individualistic and Ecuador as the least.