Does technical analysis work on penny stocks? If yes, and we're talking about stocks that trade under $3, is there a point at which it stops being effective?

If yes, does technical analysis work the same for stocks trading at $3 as it does for stocks trading at $0.50?

If no, then why? Is it because of the volatility or the market they are traded under?

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    Does technical analysis work on non-penny stocks? Commented Feb 14, 2012 at 18:14
  • @JoeTaxpayer I suppose my question should be, do tech analysis strategies work the same on lower priced stocks as they do for higher priced stocks. I'm assuming tech analysis does work as the basis for this question. Not sure why I got a down vote though. Commented Feb 14, 2012 at 19:27
  • You can check my rep changes, it was not from me. I don't downvote just because I'm skeptical of a strategy. I just +1, as I think the comparison is fair. Commented Feb 14, 2012 at 19:50
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    Not sure if this is helpful, so I post it only as a comment, but since sometimes (often?) penny stocks can be lower volume stocks, one of my other questions might be good to look at, as it made me think twice about using something like technical analysis on penny stocks: money.stackexchange.com/questions/11456/…
    – Chelonian
    Commented Feb 14, 2012 at 22:07

1 Answer 1


support and resistance levels exist. these are just psychological barriers that are easily charted. gaps fill, breakouts happen, volume and price diverge and converge

indicators that need charting frequently don't work simply because there isn't enough pricing information and volume.

  • This makes most sense. I suppose the limitations of most low priced stocks is the lack of data which indicators need to work off of. Commented Feb 14, 2012 at 19:30

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