DAX - Possible S/H/S top

DAX - Possible S/H/S top bulding

DAX possible S/H/S top building 

The DAX index ended its major wave 5 in early July 2007 at 8,151.57 and we have since then seen wave (A) down to 3,588.89 in early March 2009 and wave (B) ended almost perfectly on the 138.2% extension target of wave (A) at 9,931.15 (the high came in at 10,050.98). I'm now looking for an impulsive decline in wave (C) lower to 2,693, where wave (C) will be 161.8% longer than wave (A), which is a very common target for an expanded flat correction.

The DAX is likely building a S/H/S top, with the left shoulder building from late October 2013 mid-March 2014 and the head building from mid-March 2014 to early August 2014 and since early August 2014 the right shoulder has been building. To activate this top-formation a break below the neckline at 8,903 is needed for a measured decline to 7,755, but that is the minimum target. The decline could easily be much larger and likely will be much larger as I expect an impulsive decline in wave (C). I would expect the break below the neckline to be seen in late October 2014. 

Looking at both the MACD and the RSI indicators, we have seen the classic divergence build since the top of the left shoulder to the top of the head confirming a clear loss of momentum during the last part of the rally.  

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2014-05-26
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2014-09-14
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2014-05-28
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