Psychology is very important in the financial markets. It can move prices and create important levels.
Some analysts say earnings and future prospects determine stock prices. These fundamental metrics are important in the long run. In the short run, psychology and emotions move prices.
An example of this can be seen on Intel’s chart (see below). The shares ran into resistance around the $100 level yesterday.
There is no way fundamental metrics can justify why the $100 level is important. But it is easy to understand if investor psychology is considered.
People like to place orders at round price levels. These are called psychological levels.
Intel Downtrend
In early June, there were more Intel shares for sale than there were to be bought….
