Psychological level

Psychological level

In finance, psychological level, is a technical level which has a fairly significant effect on the price of an underlying security, commodity or a derivative. A number which is "easy to remember" such as those which are rounded off. When such price is reached by the specific security, commodity or a derivative, the tendency of the financial market participants (traders, market-makers, brokers, investors, etc.) is to observe the number and act on their positions (either to buy, sell or hold).

Examples:

1. Dow Jones Industrial Average Index - $14,000.00 - the all-time high psychological thousandth level as of 11/9/2007. Also known as "Dow 14,000".

2. Crude Oil (light, sweet) - $100.00/barrel

REFERENCES:

As used by finance analysts and business reporters:

1. http://www.thestreet.com/_yahoopi/markets/marketfeatures/10260856.html?cm_ven=QUIGO&cm_cat=FREE&cm_ite=NA

2. http://www.tradingmarkets.com/.site/eminis/commentary/guestcommentary/-71686.cfm

3. http://www.dailyfx.com/story/dailyfx_reports/daily_technicals/Euro_and_Aussie_Topping__1193913286650.html

External links

* [http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W61-4K5HWSJ-1&_user=10&_coverDate=12%2F31%2F2007&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=c25caef97e16efa4e7379c83dd7e5370 Psychological barriers in gold prices? ]


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