⚙️ What is the “Shock-Absorber Effect”?
Simple.
Markets hate surprises… but they love pricing them in.
The Shock-Absorber Effect occurs when:
- ⚡ Initial Shock — Price gaps hard, volatility spikes
- 📏 ATR Expands — Range widens as inefficiencies peak
- 🧠 Participants Process Information — Emotion → Logic
- 🧮 Risk Gets Repriced — Headlines become “known risk”
- 🔄 Volatility Dampens — Like a suspension system absorbing impact
Just like a vehicle hitting a pothole…
The first impact is violent…
But the shock absorbers kick in and stabilize the ride.
Markets behave the same way.
As the headline risk gets digested, price action transitions from chaotic expansion → structured