The Elliott Wave Principle
The Principle was created by Ralph Nelson Elliott. This work has begun to spread with the book ‘The Wave Principle’ published in 1938. Elliott Wave Theory based on an examination of the fluctuations brought about by the psychological behavior of the investors in the markets.
The First Wave: It is formed by the breaking of the market that moves in a certain trend. It leads the formation of a new trend. If it is going up trend, it moves upwards. If the downward trend will occur, it will move downward.
Second Wave: This wave moves in the opposite direction of the first wave. This mobility comes at a certain rate. The second wave plays the target in proportion to the first wave. These ratios are; 38.2% for the second, 50% for the third, 61.8% for the fourth, and 76.4% for the last.
Third Wave: This wave is quite dynamic. Bullies are entering the market on this wave. Therefore, the transaction volume increases.
Fourth Wave: This Elliott Wave starts with the bull and the bears withdrawing from the market. This region is the most accurate place to end transactions. A significant economic conjuncture, as described in this region, may lead to the subsequent beginning of the fifth wave. In this case, it gives the signal to enter again.
Fifth Wave: Although it has a dynamic structure, it is less than the third wave. Economic data is also very important in this wave, and it follows an impressive path in the movement of the wave.
The most important benefit of this Elliott theory is; Investors can gain insight into this principle and gain experience so that they can comment on the direction of the market without any indication that they are looking at the graphs.