Diagonals are wedge-shaped Elliott Wave patterns that occur in specific positions within the wave structure. Leading diagonals appear in wave one or wave A positions and signal the beginning of a new trend. Ending diagonals appear in wave five or wave C positions and signal trend exhaustion. Both types feature overlapping sub-waves contained within converging trendlines.
Leading diagonals subdivide into five waves with a three-three-three-three-three internal structure. Ending diagonals also subdivide into five waves with three-wave sub-structures in each leg. Both types feature wave overlap — wave four enters the territory of wave one. Converging trendlines connect the highs and lows of each wave. Throw-over (a brief break beyond the diagonal's trendline) is common and often marks the terminal point.
Enter after a completed ending diagonal breaks back through its upper or lower trendline. Leading diagonal completion in wave one suggests entering on the wave two pullback. Look for volume divergence as the diagonal progresses — decreasing volume confirms exhaustion. A throw-over followed by a sharp reversal back inside the pattern is a high-probability entry.
After an ending diagonal, target a retracement to at least the start of the diagonal. Stop beyond the throw-over extreme. Leading diagonal trades target wave three, which is typically the strongest impulse wave. Exit if the diagonal's origin point is invalidated.
1H, 4H, Daily
Ending diagonals are among the most reliable exhaustion patterns in Elliott Wave theory because they signal the final thrust of a tired trend. The key identification feature is overlapping waves — if waves do not overlap, the pattern is likely an impulse, not a diagonal. Always confirm with momentum divergence on RSI or MACD.
Fibonacci ratios are central to Elliott Wave — they define where waves are likely to end and project targets for the next wave. Key retracement levels (0.382, 0.5, 0.618, 0.786) identify where pullback waves (2, 4, B) are likely to end. Extension levels (1.272, 1.618, 2.618) project where motive waves (3, 5, C) are likely to reach.
Elliott Waves are fractal — the same five-wave impulse and three-wave corrective patterns appear at every scale, from monthly charts down to tick charts. Wave degrees label these nested patterns: Grand Supercycle, Supercycle, Cycle, Primary, Intermediate, Minor, Minute, Minuette, Sub-Minuette. Understanding multi-degree analysis allows traders to see how smaller waves fit into larger structures.
Complex corrections in Elliott Wave theory combine two or three simple corrective patterns (zigzags, flats, or triangles) connected by intervening waves labelled X. These structures — double and triple zigzags, double and triple threes — create extended sideways or slightly trending corrective phases that consume time and frustrate traders before the larger trend resumes.
The impulse wave pattern consists of five waves in the direction of the larger trend: three motive waves (1, 3, 5) separated by two corrective waves (2, 4). This is the core structure of Elliott Wave Theory. Wave 3 is typically the longest and most powerful, never the shortest. Wave rules: Wave 2 cannot retrace beyond the start of Wave 1. Wave 4 cannot overlap with Wave 1 territory (except in diagonals).