Here is the monthly chart of MBL Infrastructure (NSE:MBLINFRA). It caught my eye due to a large move this month with great volumes. What’s more interesting is that the structure of the stock looks “textbook” example of Elliott Waves.
Long term counts are marked in green with a circle around counts. Intermediate counts are in blue digits with a bracket around them and internal counts (short term) are also marked in blue but in roman numbers with brackets.
Now, we seem to be in intermediate wave 3 of longer term wave 3 – which is typically the most tradable setup. The stock took out the previous swing high of intermediate wave 1 and closed decisively above it this month. As per the equality principle, we expect the intermediate wave 3 target as 154 from current price around 67. But if we are looking at longer term then we need to consider larger degree wave 3 which gives a minimum target of around 260. Considering the fact that we have a long term resistance just above it around 310, it would be reasonable to say that longer term wave 3 should go easily reach 300/310 zone. That would be a multi-bagger 4.5x move and I expect this move to be done within next 2 years.
Note that this is just wave 3 of long term, which should be followed by wave 4 correction (310 resistance is a good place for wave 4 down to begin) and wave 5 up which should eventually take the stock above 310 zone.
What about the risk? This setup is invalidated if the stock breaks below the low (36.15) of intermediate wave 2 of larger wave 3.
If we enter at current price around 67 with a stop below 36.15, we get a risk-reward of 1:6 for larger wave 3 minimum target around 260. And if we keep the target to 300+ as per the resistance then we get a risk reward of around 1:7.5.
Disclaimer: Purpose of this post is to educate on technical analysis methodologies and not giving trading/investing advice.
