NSEMidcap index: Applied Fibonacci ratios, identify an impulse pattern and forecast the trend!

NSE Midcap index has moved higher impulsively from the lows of 6500 since September 2013.

The entire up move has been very clearly divided in 5 waves so far unlike Nifty that has shown corrective behavior.

An impulse pattern behaves in a peculiar way and it is very easy to identify them. The forecasting and accuracy also increases during its formation. The below chart will help you understand the impulse move in NSE Midcap index along with probable price targets.

NSE Midcap Index Daily chart:

Waves Analysis:

The below excerpt is picked up from the daily research report “The Financial Waves short term update” – our flagship product that identifies the trend on Nifty, stocks and indices along with detailedElliott wave counts, applied technical analysis & crucial support & resistance levels.

As shown on above chart, prices are currently in wave 5 and wave 4 formed an irregular Flat correction pattern. The wave c of wave 4 completed near 10940 on 16^th October and since then wave 5 is ongoing. Prior Wave 3 traveled to very close approximation of 2.618 times wave 1. This adheres to the guidelines of Elliott wave theory very well.

Also we can clearly see strong alternation between primary wave 2 and wave 4, where wave 2 consumed less time compared to 4, wave 2 was a simple corrective pattern whereas wave 4 formed Irregular Flat pattern, wave 4 was more complicated compared to wave 2.

Initially we expected wave 5 to complete at the high of 12000 but looking at the slower fall post 5^thcompletion the current structure looks more probable. The ongoing wave 5 can now reach near 12100 zone which is 61.8% level of wave 1. However, as wave 3 has been extended to the extent of 2.618 there is also a high likelihood that wave 5 can truncate or form double top. The reason being lot of power is already consumed during the formation of wave 3 and so the current trend will lack the strength. This is also visible with negative divergence seen on RSI between wave 3 and wave b of 4 that touched new highs.

In short, NSE Midcap and broader market is currently moving higher in final primary wave 5 which can complete near ……….Break of 2-4 trendline will be a strong negative confirmation!

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