The recent flash correction from the top of 10,137 registered on the 2nd August caught many market participants on the wrong foot as market almost erased the gains of preceding 4 weeks in a single week.
However, post this 5 percent correction bears failed to push the prices further lower in subsequent 2 weeks which allowed the bulls to consolidate with positive bias and make an attempt to pull back.
The attempt to pullback did not materialise and these three weeks of price action is slowly unfolding into a corrective pattern which can be clubbed into a consolidation formation in which bulls and bears will have an equal balance of power.
Hence, for quite some time market will get itself embroiled into a volatile phase with sudden spurts both on the upside as well as downside without clear indication in which direction they are heading.
For this purpose, when we dig into historical chart patterns we found there is a higher probability of eventually breaking out on the upside thereby making this correction as an opportunity to go long.
Our medium-term forecast based on Elliot Wave charts is clearly identifying this leg of correction either as wave 4 of the impulse which is in progress from the lows of December 2014 or it can be wave 4 inside wave three of a larger degree of a said impulse wave.
While based on the former count, we can project target around 10,450 levels where as in latter case targets can be much higher.
Even conventional technical parameters on the long-term charts is pointing towards stability in markets as the overbought nature of momentum oscillators synchronised to normalcy without generating any sell signal as markets moved sideways for last two weeks.
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