Leading Diagonal / 先導ダイアゴナル
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 1 of an impulse or Wave A of a zigzag correction. Unlike regular impulse waves, Wave 4 is allowed to overlap with Wave 1's price territory. It forms converging trendlines (wedge shape), with internal structure of either 5-3-5-3-5 or 3-3-3-3-3. When confirmed, it signals the strong beginning of a new trend, with powerful price action expected in the trend direction after the diagonal completes. However, it appears less frequently than regular impulse waves and requires deep understanding of Elliott Wave for accurate identification.
Enter long when the 5 waves of the leading diagonal complete and price breaks out above the upper trendline. Since this signals the beginning of a new trend, entering on a pullback (Wave 2 correction) after breakout is also effective. Wait for reversal candlestick patterns (bullish marubozu, engulfing, etc.) or oscillator divergence resolution for a safer entry.
First target: project the diagonal's height (Wave 5 high minus Wave 2 low) upward from the breakout point. Second target: Fibonacci extension at 1.618 times the diagonal height. Since a powerful Wave 3 typically follows a leading diagonal, larger moves can be expected.
Place a stop-loss slightly below Wave 2's low or below the entire diagonal's starting point (Wave 1's origin). If Wave 2's low is breached, the pattern premise fails, so exit immediately.
Volume tends to gradually decrease during diagonal formation. Lowest volume near the completion of Wave 5, with a surge at breakout being the ideal pattern. Volumes are relatively higher on Waves 1 and 3, lower on Waves 2 and 4.