I have been a little puzzled in regards to how the price-action since the April 2011 low at 10,404 could fit into my long term view calling for a top in 2013 as wave D of an Expanding Triangle.
If we count the rally from the March 2009 low at 6,470 to the May 2011 high at 12,840 as a five wave rally, this would be labeled as wave A, the following decline from 12,840 down to 10,404 in October 2011 was clearly in three waves as is the rally from 10,404 to the 13,338 high on May 1'ste. 2012. If this count is correct the most likely outcome is that an Expanding Flat correction has been unfolding since May 2011. That also means that we are currently tracing out the C-leg down of the expanded flat correction. The ideal target-area for wave C will be in the 9,665 - 9,913 area.
The fine thing about this count is, that the break below 10.404 will have most call for a new long term decline towards the 2009 low and therefore it will most likely hurt the most. As will the following rally in wave C to the new all time high in red wave D.
If we concentrate on the current decline from 12,840 it follows all the characteristics of a C wave. It's fast and the corrections is shallow and when done it will be a five wave decline, which will have most look for a three wave correction from the bottom of wave C. and thereby most will be caught of guard when it rallies beyond the 12,840 high.
There is of cause no guarantee for this scenario, but I do like all the possibilities of catching most of guards.
