Research / Price structure and anchoring

Price anchoring

Distance from a salient past price shapes how far a move continues or reverses.

The idea

Distance from a salient past price, such as the yearly high, shapes how far a move continues or reverses.

Why it might exist

Participants anchor on reference prices and under-react when price approaches them.

Who is on the other side

Anchored participants.

What would retire it

The sign or size does not hold on later data.