You might like to look into any technical analysis on the topic
of "contracting triangles", or more particualrly Elliott Wave theory
on the topic of contracting triangles. Here, there is an expectation
of shorter time frames for ever short price movements. If the "target
price" you mention in your note is in the middle of the triangle, the
price action you mention would be noted in the triangle.
But it must be stated that the price action referred to is not a
universal expectation of price action. For example, after hitting the
price that this sceanrio expects a rebound from, the price could fail
to hit the higher "target price" and then go below the "rebound from"
price in a true decline.
The benefit of the technical analysis is to know when triagular price
action is expected and when it is not.
--- In Behavioral-Finance@yahoogroups.com
, "Michael Wannke"
> Dear group members,
> are there studies showing that a "rebound" to a certain price level
of an equity is faster/more probable than a first hit of this price
> E.g. let's take NASDAQ during the last year:
> Starting from 2400 the first time, it has taken approx. 3 months to
reach the 2500.
> The second time NASDAQ hit 2400, it has taken only approx. 1.5-2
months to reach 2500.
> Firstly, it seems to me that there are some more examples of this
(DAX, etc.) , but is this an effect that takes place regularly?
Secondly, if this hypothesis is valid, it seems to me that it might
strongly be driven by psychological effects - which ones would you
consider for an explanation?
> Thanks for your comments on this topic!