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Price exhaustion and number preference: time and price confluence in Australian stock prices

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  • Doucouliagos, Hristos

Abstract

Confluence occurs when different trading filters generate signals that point to the same directional move. Using regression analysis, this paper investigates confluence trading signals associated with number preference and price exhaustion, for a sample of Australian stocks. The results show that certain price levels tend to act as psychological barriers, and that price exhaustion signals are a real phenomenon in the Australian stock market. It is shown also that confluence exists in the Australian stock market. Importantly, confluence is associated with price retracements that are of economic and statistical significance, offering profitable trading opportunities. The results suggest that Australian stocks do not follow a random walk.
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Suggested Citation

  • Doucouliagos, Hristos, 2003. "Price exhaustion and number preference: time and price confluence in Australian stock prices," Working Papers eco_2003_06, Deakin University, Department of Economics.
    • Handle: RePEc:dkn:econwp:eco_2003_06
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    File URL: https://www.tandfonline.com/doi/full/10.1080/1351847042000254194
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    Cited by:

    1. Florian El Mouaaouy, 2018. "Financial crime ‘hot spots’ – empirical evidence from the foreign exchange market," The European Journal of Finance, Taylor & Francis Journals, vol. 24(7-8), pages 565-583, May.

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