Predicting the movement of the stock market price using Elliott Wave Principle / Nurafiqah Dayana Marli Safri Nizam, Nur Adriana Khalid and Farah Syakirah Farizar

A wave principle that known as Elliot Wave Principle (EWP) is a wave theory commonly used on technical analysis in analysing the trend of the price of the stock market developed by Ralph Nelson Elliott, who studied stock market data in the 1930s. The objective of traders and investors in market is to forecast the stock market price in order for them to have a low risk and a high return of profit earnings. However, CoronaVirus Disease, 2019 (COVID-19) has caused an unexpected economic disruption and unprecedented drop in the stock market. Thus, most investors find it hard to predict and analyse stock movements during the pandemic. The purpose of this paper is to analyse the movement of the stock market price using the EWP method. After analysing the stock movement and succeed on validation of the EWP, this paper focused on to forecast the trend movement of the stock market price in the future. To prove the applicability of the EWP to stock markets, a model formulation was conducted and implemented on three different companies in Malaysia named, Dagang NeXchange Berhad (DNEX) (4456) from the technology sector, Westports Holdings Berhad (WPRTS) (5246) from the transportation and logistics sector, and Sime Darby Berhad (SIME) (4197) from the consumer products and services sector, and consisting of 157 weeks of stock price data. The three companies were chosen due to their relatively significant market capitalization. After stock price data of the three companies collected, formulation was developed based for the wave equations based on EWP then, technical analysis was conducted. Furthermore, validation on each wave also carried out by using IF statement in Excel and the result be presented in truth table. As the result showed that the waves formed using EWP are valid and can be applied in analysing the closing price, then, an analysis for predicting the stock market price on DNEX was performed. To conclude, the two objectives of this research are achieved. The resultsillustrate that the Elliott model has been a valuable tool for forecasting the currency market, as the actual pattern fully confirmed the expected pattern. Accurately identifying the actual wave can be regarded as the optimal method for forecasting future price movements and determining profit targets. In a nutshell, other indicator tools such as the Moving Average Convergence Divergence (MACD) oscillator, the Elliott Wave Oscillator, and the Relative Strength Index (RSI) oscillator also could be used for further research.