Testing the efficiency of EMA and RSI during Covid and Pre Covid period: A Study on BRICS

Abstract

The paper is based on testing the efficiency of EMA and RSI during the Covid and Pre Covid period on the BRICS nation. The research is conducted on the four years data set starting from 1^st January 2018 to 31^st December 2021. The data is divided into two sub period which are identified as Covid and pre Covid period. The pre Covid period is taken from 1^st January 2018 to 31^st December 2019 and Covid period is taken form 1^st January 2020 to 31^st December 2021. In the paper the researcher has used two different time period techniques of EMA which are EMA 5-20 and EMA 5-200. The researcher has used Relative strength index technique by using 50 crossover rule. In order to test the efficiency of the techniques the researcher has calculated Alpha returns for all the markets. The alpha returns are calculated by subtracting the index return i.e., the return of passive strategy, from the return as generated by the markets by using the different techniques under study. During the research it has been found that the efficiency of EMA and RSI is not found to be strong in any of case. There is a very low efficiency of EMA 5-200. EMA 5-20 and RSI has shown some efficiency but that was also not so strong that it can be said that the investor can use techniques of technical analysis (EMA and RSI) as the predicted tools and can generated the higher returns over the passive strategy.