India Sri Dharmasthala Manjunatheshwara College Business School Scholar S. Muruganandan published in the Colombo Business Journal, using the India Bombay Stock Exchange (BSE) Sensex index as the research subject. The study collected historical data from February 2000 to May 2018, covering multiple bull markets, bear markets, and consolidation periods, to examine the actual profitability of two of the most common technical indicators: Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD).

RSI performance is completely overshadowed, unable to create stable advantages in any market cycle
The results show that RSI trading strategies, over the entire sample period, did not yield average returns significantly better than the unconditional average returns of "taking no strategy," whether in buy or sell signals, even before deducting transaction costs, indicating poor efficiency.

Further breakdown of market cycles reveals that during most bull markets, RSI frequently issued sell signals but failed to effectively capture trend continuation; in bear or consolidation periods, although buy signals increased, they often entered too early, leading to poor performance. The study points out that the structural characteristics of RSI make it prone to contrarian operations in unidirectional trending markets, which becomes a performance drag. From a risk-adjusted perspective, the Sharpe ratio of RSI strategies is mostly negative, indicating that the risks undertaken did not yield commensurate returns.

MACD only briefly outperforms in bear market sell signals
In comparison, MACD performs slightly better but still cannot be considered stable or reliable. The study found that MACD buy signals across all market cycles did not yield significantly better average returns than the market itself; however, sell signals during most bear markets did produce statistically significant positive returns and outperformed unconditional average returns.

This suggests that during market declines, MACD can help traders avoid some losses or profit through short-selling strategies. However, when further considering risk measures, it was found that even though sell signals in bear markets generated profits, their Sharpe ratios remained low, indicating that the returns were insufficient to compensate for the volatility risk of the strategy. In other words, MACD is useful in certain scenarios, but there is a clear gap before it can become a long-term reliable profit tool.