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Price Clustering in International Financial Markets during the COVID-19 Pandemic and Its Implications

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  • Samuel Tabot Enow

    (The IIE Vega School, South Africa)

Abstract

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.

Suggested Citation

  • Samuel Tabot Enow, 2022. "Price Clustering in International Financial Markets during the COVID-19 Pandemic and Its Implications," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 10(2), pages 46-53.
    • Handle: RePEc:ejn:ejefjr:v:10:y:2022:i:2:p:46-53
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    References listed on IDEAS

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    1. Donglian Ma & Hisashi Tanizaki, 2022. "Intraday patterns of price clustering in Bitcoin," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-25, December.
    2. Caporin, Massimiliano & Ranaldo, Angelo & Santucci de Magistris, Paolo, 2013. "On the predictability of stock prices: A case for high and low prices," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5132-5146.
    3. Bill Hu & Christine Jiang & Thomas McInish & Haigang Zhou, 2017. "Price clustering on the Shanghai Stock Exchange," Applied Economics, Taylor & Francis Journals, vol. 49(28), pages 2766-2778, June.
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    Cited by:

    1. Samuel Tabot ENOW, 2023. "A Non-linear Dependency Test for Market Efficiency: Evidence from International Stock Markets," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 7(1), pages 1-12.
    2. Samuel Tabot Enow, 2022. "Modelling Stock Market Prices Using the Open, High and Closes Prices. Evidence from International Financial Markets," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 15(3), pages 52-59, December.
    3. Samuel Tabot Enow, 2023. "Investigating Joint Market Hypothesis during Periods of Financial Distress and its Implications," International Journal of Economics and Financial Issues, Econjournals, vol. 13(2), pages 46-50, March.

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