In this paper we deal with the important problem of estimating the local strain tensor from a sequence of micro-structural images realized during deformation tests of engineering materials. Since the strain tensor is defined via the Jacobian of the displacement field, we propose to compute the displacement field by a variational model which takes care of properties of the Jacobian of the displacement field. In particular we are interested in areas of high strain. The data term of our variational model relies on the brightness invariance property of the image sequence. As prior we choose the second order total generalized variation of the displacement field. This prior splits the Jacobian of the displacement field into a smooth and a non-smooth part. The latter reflects the material cracks. An additional constraint is incorporated to handle physical properties of the non-smooth part for tensile tests. We prove that the resulting convex model has a minimizer and show how a primal-dual method can be applied to find a minimizer. The corresponding algorithm has the advantage that the strain tensor is directly computed within the iteration process. Our algorithm is further equipped with a coarse-to-fine strategy to cope with larger displacements. Numerical examples with simulated and experimental data demonstrate the very good performance of our algorithm. In comparison to state-of-the-art engineering software for strain analysis our method can resolve local phenomena much better.Remark 7. The soft shrinkage (14) is obtained in the special case λ 1 = λ 2 andx 1 =x 2 .