Wave 1 of 3 became slightly deeper than my target area between 132,10 - 132,20, with the test of 131.96. Wave 1 is now done and we should see wave 2 of 3 up to 134.21. At 134.21 38.2% of wave 1 would be retraced and 134.21 also marked the high of wave (iv).
The best micro count is, that we are in the final part of wave 1 of 3 down. Wave v of 1 is now in progress and should take us down close to the 132.10-132.20 area. When wave v of 1 is done one more correction back towards 134.10 - 134.20 should be seen. Even Though this is my preferred count I would stress, that we are in wave 3 down and correction tends to be sub-standard and extensions within extensions can easily be seen.
Wave iii ended at 132.85 just 4 pips above the previous wave (iii). The following rise makes the best count for wave iii a fifth failure (At 32.82 wave iii became exactly 1.618 time longer than wave i) and the current rise wave iv. This wave iv should terminate near 134.21 and setting the stages for wave v's decline down to 132.10 ending wave v of 1 of 3.
As we haven't broken below 132.82 yet, wave (iv) could evolv into a triangle. If a triangle is developing we can expect a run back up to 133.97 as wave c and then wave d down to 133.26, before wave e, which can take whatever shape possible.
Wave (iv) is now in place and wave (v) down is ongoing. Wave (v) should break below 132.82 ending wave iii and setting the stages for wave iv, which should again correct back up to the 134.12 -134.31 area.
The Banking Index has been building a major Shoulder/Head/Shoulder top since August. A break below the neckline at 43.00 will be very bearish with an objective in the 26.85-27.00 area. The banking industry is normally an leading indicator for the stock market in general. If the topformation is triggered it will have a major impact on the rest of the market.
The German DAX Index is looking toppish, as the expanding ending diagonal might have topped with the test of 6,901. A break below support at 6,617 would add confidence in my call for a top.
