Democratising Technical Analysis

Abstract

This study examines whether Large Language Models (LLMs) can support momentum-based breakout strategies for retail investors by analysing technical charts and validating statistical patterns. We analysed 3,621 price charts (2023–2025) to assess LLMs’ ability to identify trading setups and deviations from random walk behaviour. 13,624 tests were run on 1,204 trades using various statistical tests. While 70% of patterns conformed to random walk behaviour in the short term (7–15 days), momentum signals rose to 26.42% over longer periods (50–250 days). Complex prompting produced both higher random walk classification (72.41% vs. 69.29%) and better returns than single-shot prompting. Incorporating Gamma Exposure (GEX) improved caution but reduced return rates. Discrepancies of up to 20% between JavaScript and Python implementations underscored LLMs’ current limitations in statistical precision. Overall, LLMs may democratise technical analysis but still require human oversight, structured prompting, and validation through traditional methods.

Keywords: {'name': 'Technical Analysis'}, {'name': 'LLM'}, {'name': 'Large Lannguage Models'}, {'name': 'Retail Investors'}, {'name': 'Momentum'}, {'name': 'Breakout Strategy'}

Authors & affiliations

Dmitrii Gimmelberg
Affiliation not supplied

Marta Glowacka
Affiliation not supplied

Alexey Belinskiy
Affiliation not supplied

Valentin Artamov
Affiliation not supplied

Max Gimmelberg
Affiliation not supplied

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