Ending Diagonal Triangle Pattern of Elliott Wave Theory

Ending Diagonal Triangle Pattern also called as ED (short form) is a complex pattern of Elliott Wave Theory  and is the part of main proceeding trend.

This article is going to explain Ending Diagonal pattern in details with its structure, rules and inner wave calculation. I tried my best to make sure that whenever you observe this pattern, you identify it perfectly and accurately.

What is Ending Diagonal Pattern?

ED Pattern as wave 5
ED Pattern as wave 5 (Image 1)

Ending Diagonal Pattern is one out of complex patterns of Elliott wave theory and comprises of five inner waves with 3-3-3-3-3 or (abc-abc-abc-abc-abc) structure and it occurs only in wave (5). 

So whenever you are observing something like ED, you need to make sure that there is wave (1), (2), (3) and (4) before the start of this pattern . Inner wave (5) of Impulse can only be ED, but inner wave (v) of ED cannot be ED. See (Image 1)

Structure of Ending Diagonal Triangle

Ending Diagonal Triangle (ED) comprises of 5 inner waves with 3-3-3-3-3 or (abc-abc-abc-abc-abc) pattern. All the 5 waves of ED have 3 wave’s (abc) pattern that’s why we call it 3-3-3-3-3.

Within those 5 waves,

  • Waves (i), (iii) and (v) is always a Simple Zigzag (abc).
  • Wave (ii) and (iv) can have any corrective pattern out of Simple Zigzag, Flat Correction, Irregular Correction or Complex Pattern (combination of ‘abc’ patterns).

 

Wave (iv) always overlap wave (i) in Ending Diagonal Pattern.  Wave (iv) can never overlap (i) in a five wave’s Impulse Pattern but Wave (iv) must overlap wave (i) in ED.

Though wave (iv) always enters the range of wave (i) but wave (iv) can never break below the end of (ii). See (Image 2).

Structure and Fibonacci Calculation in Ending Diagonal
Structure and Fibonacci Calculation in Ending Diagonal (Image 2)

Fibonacci Retracements and Projections within Ending Diagonal

Observing Fibonacci projections and retracements of internal waves of ED is important to identify it accurately.

Inner wave (iii) of Ending Diagonal (ED) can never be extended wave, means it can never project more than 161%.

Wave (v) is always extended, means wave (v) projects more than 61% every time.

Its inner waves follows the same rule of alternation that “either one out of wave (iii) or (v) needs to be extended”. Because wave (iii) cannot be extended in ED, so wave (v) needs to be extended. Look at (Image 2)

Drawing the Lines of ED

Ending Diagonal is a closed pattern which forms a Triangle or Wedge that’s why we call it an Ending Diagonal “Triangle”. And there is a definite way to draw the lines of pattern.

ED is always a closed pattern and can never be an open pattern. So, always draw the lines whenever you are expecting or observing it. Drawing the line will solve maximum of your confusions.

Drawing lines of Ending Diagonal Pattern
Drawing lines of Ending Diagonal Pattern (Image 3)

There are 02 lines in ED pattern (upper and lower) and one line must be drawn by joining the end point (tip) of wave (i) and (iii) and other line must be drawn by joining end point (tip) of wave (ii) and (iv).

Many analysts draw line from start of wave (i) which is not the correct way.

Both the lines joining wave (i)-(iii) and (ii)-(iv) can never be disturbed. Means no part of any wave can be out of these lines until the ED is completed.

If you are expecting an ED but these lines are disturbed or broken then either you are marking it wrong or it is not Ending Diagonal.

Last wave (v) of ED need not to touch the line formed by joining wave (i) and (iii). Wave (v) of ED just needs to break the end of wave (iii) and to achieve its minimum 61% Fibonacci projection.

The minimum limit of inner wave (v) of ED is end point of wave (iii) and 61% projection (both conditions must fulfill) and maximum limit is the line joining wave (i)-(iii). Wave (v) can never break out of the line joining (i)-(iii).

Breakout happens from the line joining wave (ii) and (iv) after completion of ED.  Means you can always expect price to break below/above the line joining waves (ii)-(iv) after completion of wave (v) of ED.

Ending Diagonal Triangle with wave (i)>(iii)>(v)

ED with wave (i)
ED with wave (i)<(iii)<(v) Image 4

Wave (iii) cannot be shorter than (i) in an Impulse Pattern. But wave (iii) can be shorter than (i) in Diagonal Triangles.

Whenever you are seeing wave (iii) is shorter than (i), you must expect wave (v) shorter than (iii). Because it’s definite rule of Elliott wave cycle that wave (iii) can never be the shortest wave. 

So, when wave (iii) is already shorter than (i) then it can never be shorter than (v). Rule of extensions or alternations is not applicable in this condition.

This condition of wave (i)>(iii)>(v) can happen in any form of Triangle (Expanding, converging or parallel) depending upon the speed of inner waves but it is mostly seen in ED as Converging Triangle.

Examples of Ending Diagonal Pattern on Real Charts

Ending Diagonal Pattern on Nifty 5 Minutes Chart
Ending Diagonal Pattern on Nifty 5 Minutes Chart (Image 5)

The Ending Diagonal Triangle shown in (image 5) completed on small time frame on 11 April 2016. This ED have wave (i)>(iii)>(v) followed by great reversal.

Ending Diagonal Triangle completed on Nifty Chart
Ending Diagonal Triangle completed on Nifty Chart (Image 6)

There is one more ED like pattern completed in June 2016 (shown on Image 6) which is following all the rules.

There are many more examples on old chart but you will get real experience only when you see forming it live. That is the reason I don’t give much importance to old examples. This pattern forms frequently, so wait for its formation in future to observe it forming live. 

I will definitely explain it in my analysis reports and will post on Sweeglu Elliott Waves blog whenever I see any indications of Ending Diagonal Triangle Pattern.

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Practical Application of Elliott Wave Principle
Deepak Kumar, Elliott Wave Theory Analyst

About Deepak Kumar

An independent Elliott Wave Theory analyst, trainer and trader. Analyzing Indian Indices and stocks since 2011. Founder of “Sweeglu Elliott Waves” and author of most practical book on Elliott Wave Theory, “Practical Application of Elliott Wave Principle”

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