Psychological Barriers in Single Stock Prices: Evidence from Three Emerging Markets

Júlio Lobão, João Fernandes


Purpose – The purpose of the study is to examine the prices of some of the most widely traded stocks from Taiwan, Brazil and South Africa for indications of psychological barriers at round numbers.

Design/methodology/approach – The sample under study includes a group of 24 stocks (8 for each one the emerging markets) during the period 2000-2014. We test for uniformity in the trailing digits of the stock prices and use regression and GARCH analysis to assess the differential impact of being above or below a possible barrier.

Findings – We found no consistent psychological barriers in individual stock prices near round numbers. Moreover, we document that the relationship between risk and return tends to be weaker in the proximity of round numbers for about half of the stocks under study.

Originality/value – This is the first study to examine the prices of single stocks from emerging markets for indications of psychological barriers at round numbers. Our results advocate special reflection regarding trading strategies linked to support and resistance levels in stock prices.


psychological barriers; M-values; market psychology; round numbers; emerging markets.


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