The break below important support at 127.86 tells us that the decline in wave (E) can't be complete with the test of 124.62 and more downside should be expected.

Both the rally from 124.62 to 131.99 and the following rally from 124.90 to 133.13 have been three-wave moves indicating that they are corrective by nature and more downside pressure is needed before wave (E) can complete.

The decline from the peak of wave (D) at 137.50 to 124.62 is also clearly in three waves, so a more complex double zig-zag is expected to develop after the rally from 124.62 has proven itself to be corrective in nature. If the second zig-zag becomes of the same length as the first from 137.50 to 124.62, then a decline to 120.19 should be expected in the weeks or months to come.

The ongoing decline from 133.13 does look a bit short-term overstretched and wave b could be ready to start developing anytime soon. A break above minor resistance at 128.70 will be the first indication that wave a has completed and wave b is developing for a rally towards 130.20.

R3: 129.22

R2: 128.47

R1: 128.08

Pivot: 127.90

S1: 127.47

S2: 127.20

S3: 126.61

Trading recommendation:

Our stop at 128.20 was hit and we will stay sidelined for now.