PRICE CLUSTERING IN INTERNATIONAL FINANCIAL MARKETS DURING THE COVID-19 PANDEMIC AND ITS IMPLICATIONS

PRICE CLUSTERING IN INTERNATIONAL FINANCIAL MARKETS DURING THE COVID-19 PANDEMIC AND ITS IMPLICATIONS

The proliferation of trading strategies in many security markets has led to intense scrutiny of market price movements and their distribution. The increase in trading activities across financial markets around the world has enhanced the likelihood of behavioral biases and the tendency for stock pric...

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Bibliographic Details
Published in:Eurasian journal of economics and finance 2022, Vol.10 (2), p.46-53
Main Author: Enow, Samuel Tabot
Format: Article
Language:eng
Subjects:
Behavior
Clustering
Coronaviruses
COVID-19
Efficiency
Efficient markets
Hypotheses
International finance
Investment policy
Investments
Literature reviews
Market prices
Markets
Pandemics
Prices
Scrutiny
Securities markets
Stock exchanges
Stock prices
Trading
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Summary:The proliferation of trading strategies in many security markets has led to intense scrutiny of market price movements and their distribution. The increase in trading activities across financial markets around the world has enhanced the likelihood of behavioral biases and the tendency for stock prices to cluster around certain intervals. The purpose of this study was to investigate price clustering and psychological barriers in the NASDAQ Index, CAC 40 Index, DAX Index, JPXNikkei Index 400, SSE Index, and the JSE Index from 2/01/2020 to 31/12/2021, during the height of the COVID-19 pandemic. Using chi-square and a Kolmogorov-Smirnov tests, the findings revealed evidence of price clustering in the JPX-Nikkei 400 and JSE Index, with further evidence of psychological barriers in the form of support and resistance in the JSE Index. This result implies that a retracement entry strategy is suitable for the JPX-Nikkei Index 400 and JSE Index, and a breakout strategy should be used in the NASDAQ Index, CAC 40 Index, DAX Index, and SSE Index. Security markets should actively promote UTP in order to promote price efficiencies.
ISSN:2148-0192
2148-0192