International Journal of Management & Entrepreneurship Research, Volume 5, Issue 12, December 2023

OPEN ACCESS
International Journal of Management & Entrepreneurship Research
P-ISSN: 2664-3588, E-ISSN: 2664-3596
Volume 5, Issue 12, P.No.1076-1084, December 2023
DOI: 10.51594/ijmer.v5i12.657
Fair East Publishers
Journal Homepage: www.fepbl.com/index.php/ijmer

FORECASTING THE VIETNAMESE STOCK MARKET

USING TECHNICAL ANALYSIS INDICATORS
Nguyen Viet Hung1

1
University of Economics and Business,
Vietnam National University, Hanoi, Vietnam
___________________________________________________________________________
Corresponding Author: Nguyen Viet Hung
Corresponding Author Email: viethunghp96@gmail.com

Article Received: 14-10-23 Accepted: 10-12-23 Published: 22-12-23

Licensing Details: Author retains the right of this article. The article is distributed under the terms of
the Creative Commons Attribution-Non Commercial 4.0 License
(http://www.creativecommons.org/licences/by-nc/4.0/), which permits non-commercial use,
reproduction and distribution of the work without further permission provided the original work is
attributed as specified on the Journal open access page.
___________________________________________________________________________
ABSTRACT
This study focuses on forecasting using technical analysis methods in the Vietnamese Stock
Market. By employing three highly regarded technical indicators, the research provides
observations and forecasts for the Vietnamese Stock Market (VNINDEX) in the short, medium,
and long terms. The objective is to offer specific insights, predictions, and recommendations
for investors in the Vietnamese stock market during the late stages of 2023 and the periods of
2024-2025.
Keywords: Stock Market, Securities Investment, Technical Analysis, RSI, CCI, MACD.
___________________________________________________________________________
INTRODUCTION
Investing in securities is a common financial instrument that attracts the attention of investors
and businesses worldwide. Considered an effective means to generate profits and a crucial
source of capital mobilization for enterprises, securities investment not only provides
opportunities for individual asset growth but also contributes to overall economic development.
In the realm of securities investment, the two most important and often scrutinized approaches
are fundamental analysis and technical analysis. Fundamental analysis focuses on researching
the fundamental internal factors of a company, such as profit, sales volume, dividends, and the

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prospects of the overall macroeconomy (Binh, 2023). This helps investors understand the
fundamental value of a company and decide whether to invest in the short or long term.
In contrast, technical analysis (TA) emphasizes the study and evaluation of historical price and
trading volume data of assets to predict future trends. Technical indicators such as RSI, MACD,
MFI, and price charts are utilized to identify buy and sell points, as well as assess the strength
of a trend (Nti et al., 2019; Nazário et al., 2017). Numerous studies have demonstrated the
effectiveness of TA across various markets (Chau, 2019). Furthermore, according to Nguyen
Thanh Binh (2023), TA can be applied across diverse markets if technical analysts capture price
and trading volume fluctuations in the past.
The method of technical analysis in securities has become an important and widespread tool in
the investment process, from brokerage firms to professional investors worldwide (Linh et al.,
2023). Vietnam is no exception, especially with the increasing number of individual investors
(F0) in the country. This study aims to provide a forecast of the Vietnamese Stock Market when
utilizing technical analysis in the context of securities investment in Vietnam.
This research "Forecasting the Vietnamese Stock Market using Technical Analysis Indicators"
will present a technical analysis perspective by combining three highly regarded technical
indicators in the short, medium, and long terms. The study aims to offer specific
recommendations for investors in this market.
TECHNICAL ANALYSIS AND FORECASTING OF THE VIETNAMESE STOCK
MARKET – VNINDEX IN THE SHORT, MEDIUM, AND LONG TERMS.

Figure 1-Month Timeframe Chart of VNINDEX and RSI(14)-1M

(Source: Tradingview.com)
The Relative Strength Index (RSI) stands as a critical technical analysis tool for measuring the
strength and momentum of market trends (Rodríguez-González et al., 2011). To analyze the
Vietnamese stock market (VNINDEX) in the short term, the RSI(14) values will be employed
with a 1-month timeframe (Monthly).

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From late 2022 to early 2023, the VNINDEX exhibited continuous growth, reaching a short-
term peak of approximately 1255 points in September 2023, up from around 874 points (Figure
2.1). This indicates positive accumulation and absorption of funds from investors.
In the case of the short-term VNINDEX, RSI(14)-1M experienced a similar upward cycle.
Starting at its lowest value of 37.89 in December 2022, RSI(14)-1M increased to 54.42 in
August 2023, currently standing at 46.7 in November 2023. This rise reflects the strength of the
upward price trend and overall market growth.
Currently, the RSI(14)-1M value is still in an upward trend and lies above the MA-RSI(14)-1M
moving average (yellow line in Figure 3.2). Although the value has not reached the overbought
zone, it remains positive. The absence of RSI(14)-1M divergences is a positive sign and also
supports the current upward price trend.
Based on the results of RSI(14)-1M, it can be predicted that in the late months of Q4/2023 and
Q1, Q2 of 2024, the VNINDEX will continue its short-term upward trend. The target is to reach
the range of 1250-1300 points, a resistance zone from August 2022. The continuation of this
trend is supported by the upward movement of RSI without divergences and maintaining a
position above the MA-RSI(14)-1M moving average.

Figure 2-Month Timeframe Chart of VNINDEX and RSI(14)-3M

(Source: Tradingview.com)
In the long-term perspective, VNINDEX has experienced a significant decline from its
historical peak of 1536 points in January 2022 to approximately 874 points by the end of 2022.
This reflects the uncertainty and significant challenges facing the Vietnamese stock market.
The Relative Strength Index (RSI) in the 3-month timeframe (3M) is commonly used to assess
the strength of a trend and identify overbought or oversold points in the market. In the case of
VNINDEX, RSI(14)-3M has decreased from an approximate peak of 69 in January 2022 to a
low of 49.76 at the end of 2022. Additionally, RSI(14)-3M is currently below its MA-RSI(14)-
3M, indicating persistent downward pressure. The most recent RSI(14)-3M value is 54.68 in
Q2 2023, still showing a downward trend in the medium and long term. This may signify market

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uncertainty. The absence of RSI divergences and RSI approaching oversold levels is considered
a signal of VNINDEX's potential reversal.
Based on the analysis, it is predicted that in 2024, VNINDEX will continue its downward trend,
and the point increase in 2023 is considered temporary. VNINDEX is forecasted to decrease to
the range of 850-900 points before establishing a new trend. This range represents a crucial
support level from early 2019, predating the onset of the Covid-19 pandemic.
Utilizing the Commodity Channel Index (CCI)

Figure 3. One-Month Timeframe Chart of VNINDEX and CCI(14)-1M

(Source: Tradingview.com)
The Commodity Channel Index (CCI) is commonly employed to measure overbought or
oversold conditions of security and assess price fluctuations (Maitah et al., 2016). In the short-
term analysis of VNINDEX, the study utilizes CCI(20)-1M within a one-month timeframe
(1M). According to the CCI(20)-1M chart, there has been an upward cycle from the lowest
value of -190.94 in November 2022 to 7.29 in August 2023. Currently, the CCI(20)-1M stands
at -53.43 in November 2023 and continues to trend upwards in the short term. Presently,
CCI(20)-1M is not only in a short-term uptrend but also lacks divergence, and its value has not
yet reached the overbought threshold. These signals support the short-term upward trend of
VNINDEX.
Based on the results of CCI(20)-1M, similar to RSI(14)-1M, it can be predicted that in the late
months of Q4/2023 and Q1, Q2 of 2024, VNINDEX will continue its short-term upward trend.
The expected target for VNINDEX is to reach the range of 1250-1300 points, which has been
a resistance zone since August 2022.

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Figure 4. Chart with a 3-Month Timeframe of VNINDEX and CCI(14)-3M

(Source: Tradingview.com)
For the mid and long-term perspective, the Commodity Channel Index (CCI) with a 3-month
timeframe (CCI(20)-3M) is employed to gauge trends and overbought or oversold conditions
on the 3-month chart. As of the end of 2022, CCI(20)-3M experienced a significant decline
from around 200 at the end of 2021 to a minimum of -18.42. In Q2 of 2023, the current value
of CCI(20)-3M is 28.83, and it continues to exhibit a downward trend in both the mid and long
terms.
Presently, CCI(20)-3M not only indicates a decrease but also lacks the appearance of
divergences, and the value has not reached the oversold region. This could be considered
indicative of a reversal for VNINDEX. Based on these analyses and the downward trend, it can
be predicted that in 2024, VNINDEX will continue to decrease, and the upward movement
observed in 2023 is likely a temporary phenomenon. VNINDEX is expected to approach the
range of 850-900 points before establishing a new trend, especially within the crucial support
zone from the beginning of 2019.
Utilizing the Moving Average Convergence Divergence (MACD) Indicator

Figure 5. 1-Month Timeframe Chart of VNINDEX and MACD-1M

(Source: Tradingview.com)

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The Moving Average Convergence Divergence (MACD) is a crucial technical analysis tool to
measure the difference between moving averages and predict trend reversals. In the case of
VNINDEX, MACD-1M has undergone a cycle of increase from its lowest value of -37.55 in
May 2023 to -12.79 in September 2023. However, the current value of MACD-1M is -22.67 in
November 2023, still trending downward in the short term.
Notably, the MACD line (in blue) is below the Trigger line (in orange) on the chart, and
Crossovers (instances where the MACD line crosses above the Trigger line) have not yet
occurred. This is a typical sign of a downtrend, and when MACD-1M rises into the positive
territory (>0), it could be considered a reversal signal for VNINDEX.
In contrast to the results of RSI(14)-1M and CCI (20)-1M, the MACD index predicts that in
late Q4/2023 and Q1, Q2 of 2024, VNINDEX will continue its short-term downtrend, touching
the significant support zone of 900-1000 from early 2019.

Figure 6-Month Timeframe Chart of VNINDEX and MACD-3M

(Source: Tradingview.com)
The Moving Average Convergence Divergence (MACD) with a 3-month timeframe (3M) has
been applied to analyze the long-term trend of VNINDEX. In this process, MACD-3M has
recorded a series of decreases from the long-term peak of approximately 190.36 at the beginning
of 2022 to the lows in 2022 and 2023. At the latest point, the value of MACD-3M is 99.13 in
Q2 2023, maintaining a downtrend in both the medium and long term.
An important point to note is that MACD-3M has not yet exhibited Crossovers, meaning the
MACD line (in blue) has not crossed above the Trigger line (in orange). This is a positive sign,
implying that the downtrend may continue, and when MACD-3M rises (>0), this is considered
a reversal signal for VNINDEX.
Based on the results of MACD-3M, the prediction is that in 2024, VNINDEX will contiue its
downtrend, and the upward movement in 2023 is temporary. VNINDEX is expected to decline
to the 850-900 point range before determining a new trend, and this is a crucial support zone
from early 2019. This aligns with the long-term predictions of other indicators such as RSI (14)-
3M and CCI (20)-3M. Synthesizing information from these indicators, it seems that VNINDEX
will maintain a downtrend in the long term, reaching the important support zone of 850-900 in
early 2019.

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RECOMMENDATIONS
Short-term Investment Recommendations
From the result, the study proposes some recommendations for short-term investors in the
Vietnamese Stock Market:
 Diversify Investment Portfolio: Spread investments across different asset classes to
reduce risk.
 Select Growth Potential Stocks: Choose stocks with short-term growth potential
supported by positive technical analysis.
 Flexibility in Profit-taking or Stop-loss: Be flexible in profit-taking or cutting losses
based on market conditions.
 Set Short-term Profit Targets: Set short-term profit goals and monitor both technical
and fundamental indicators to make informed investment decisions.
 Monitor News and Events: Stay informed about news and events that may impact the
stock market and adjust strategies based on the latest information.
Long-term Investment Recommendations
Based on these results, the study offers some recommendations for long-term investors in
the Vietnamese Stock Market:
 Reduce Equity Allocation: Decrease the proportion of investments in stocks and
increase holdings in cash or stable assets.
 Risk and Profit Management: Manage profits and risks through capital preservation
strategies.
 Diversify Investment Portfolio: Diversify investment sources to minimize risks in
uncertain market conditions.
 Flexible Thinking and Strategy Adjustment: Be flexible in thinking and ready to
adjust strategies based on market conditions and new information.
CONCLUSION
In summary, according to the short-term technical analysis results, the Vietnamese Stock
Market appears to be undergoing a positive recovery phase. The increase in VNINDEX from
late 2022 and the expected continued growth in Q4 2023, and Q1, and Q2 2024 have been
strongly supported by buying pressure, stable capital flow, and no overbought signals. This
creates an attractive investment opportunity with short-term price appreciation potential.
However, in the medium and long term, all technical indicators point to a decreasing trend in
VNINDEX. In this long-term downtrend, investors need to be cautious and adopt a flexible
strategy. Reducing equity investment, increasing cash or stable asset holdings, and managing
profits and risks are essential steps to face market volatility in the uncertain economic
landscape, influenced by geopolitical tensions and the ongoing pandemic. Investors need to
closely monitor signals and information from the market and swiftly adjust strategies to
safeguard investment capital.

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