Ending Diagonal / 終了ダイアゴナル
General reference values based on Elliott Wave Theory. Actual success rates vary significantly depending on market conditions, timeframe, and instrument.
A special 5-wave pattern in Elliott Wave Theory appearing in Wave 5 of an impulse or Wave C of a zigzag correction, signaling trend exhaustion and termination. All internal structures are composed of 3-wave formations (3-3-3-3-3), forming converging trendlines (wedge shape). Wave 4 overlapping with Wave 1's price territory is characteristic. After the ending diagonal completes, a rapid "throwback" to the diagonal's starting point often occurs, making it a powerful trend reversal signal. More frequent than leading diagonals, offering more practical trading opportunities.
Enter short when the 5 waves of the ending diagonal complete and price breaks below the lower trendline. If RSI or MACD divergence (new price highs but declining oscillators) is confirmed near Wave 5's peak, earlier entry can be considered. Since the throwback after completion is rapid, beware of delayed entries.
First target: the level of the diagonal's starting point (Wave 1's start), which is the typical throwback destination. Second target: Fibonacci retracement of the entire diagonal height at 0.618-0.786. As a correction to the preceding trend, even deeper levels may be reached.
Place a stop-loss slightly above Wave 5's peak. If Wave 5's high is exceeded, the pattern is invalid; exit immediately. Set an appropriate stop width relative to the diagonal's height considering the risk-reward ratio.
Volume decreases significantly during ending diagonal formation, reflecting trend exhaustion. If Wave 5 volume is clearly less than Wave 3, reversal reliability increases. A volume surge on the downside break after diagonal completion is ideal, serving as trend reversal confirmation.