As of 01/27/2022   Indus: 34,161 -7.31 0.0%     Trans: 14,810 -218.68 -1.5%     Utils: 930 +7.38 +0.8%     Nasdaq: 13,353 -189.34 -1.4%     S&P 500: 4,327 -23.42 -0.5%	YTD -6.0%   -10.1%   -5.2%   -14.7%   -9.2%	Targets    Overview: 01/13/2022     36,000 or 32,500 by 02/15/2022   16,500 or 14,400 by 02/15/2022   970 or 890 by 02/15/2022   15,000 or 12,700 by 02/15/2022   4,700 or 4,100 by 02/15/2022
CPI (updated daily): on 1/5/22

As of 01/27/2022   Indus: 34,161 -7.31 0.0%     Trans: 14,810 -218.68 -1.5%     Utils: 930 +7.38 +0.8%     Nasdaq: 13,353 -189.34 -1.4%     S&P 500: 4,327 -23.42 -0.5%	YTD -6.0%   -10.1%   -5.2%   -14.7%   -9.2%
Targets    Overview: 01/13/2022     36,000 or 32,500 by 02/15/2022   16,500 or 14,400 by 02/15/2022   970 or 890 by 02/15/2022   15,000 or 12,700 by 02/15/2022   4,700 or 4,100 by 02/15/2022
CPI (updated daily): on 1/5/22

Bulkowski on the Ending Diagonal Triangle Elliott Wave Pattern

This page describes the ending diagonal triangle of the Elliott wave principle, how price moves not in a straight line but in a series of rises and retracements.

The ending diagonal triangle, or wedge as many call it, is a narrowing price move composed of two converging trendlines highlighting a wave 5 (many times) extension pattern. The chart to the right shows the ideal example. The ending diagonal is a special type of motive wave that occurs primarily in the wave 5 position when price has moved too far and too fast. I like to think of it as a rising or falling consolidation. Some ending diagonal triangles appear in the C wave of an ABC correction, but that configuration is rare. In all cases, the ending diagonal terminates the move of larger patterns. Diagonal triangles substitute for impulse waves.

The ending diagonal triangle shown to the right is bearish because price usually breaks out downward from the pattern with price often retracing back to at least the start of the triangle.

The blue inset in the figure to the upper right shows what is called a throw-over. Throw-overs occur when price breaks out of the pattern on the side connecting the end points of sub waves 1 and 3, quickly reverses, and then moves back into the pattern.

Each subwave of the ending diagonal triangle divides into a three, so the subwave count for the triangle pattern is 3-3-3-3-3. The picture above right (bull market) and right (bear market), shows the typical position of the triangle in an impulse (motive) wave. The two solid blue squares in the above right chart highlight the overlap of subwave 4 with subwave 1. The ending diagonal triangle is the only five wave pattern moving in the direction of the main trend that frequently, but not always, shows such an overlap.

Ending Diagonal Triangle: Rules

The ending diagonal triangle has rules that govern its shape. They are listed here.

• The subwave action usually follows two converging trendlines.
• Subwave 4 often overlaps subwave 1.
• The subwave count is 3-3-3-3-3.
• A throw-over occurs when price pierces the trendline connecting the ends of subwaves 1 and 3.
• The ending diagonal triangle usually occurs as part of a fifth wave extension.

-- Thomas Bulkowski

 

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