Ending diagonals come usually at the end of a c wave or as being part of an impulsive move, as the fifth wave of that impulsive move. They are formed out of threes (that means each wave of a leading diagonal is formed out of three different waves of a lower degree) and usually they take the form of a wedge (but that is not mandatory).
On the previous sub-chapter I have analyzed the ending diagonal rules, but, as was the case with the leading diagonals, there are also some guidelines for ending diagonals, and these guidelines mean things that are more likely to happen when price is forming such a pattern like an ending diagonal.
When looking at an ending diagonal the following guidelines need to be taken into consideration:
- it is rare that at least either the second wave of the fourth wave of an ending diagonal is not a zig-zag family pattern;
- generally, the fourth wave is greater than 35% of the third wave gross price movement;
it is typical for the fifth wave of an ending diagonal to exceed the channel line drawn from the end of the first wave to the end of the third wave.
As you can see, not that many guidelines for the ending diagonal, but that doesn’t make it less important than the leading diagonal. In fact, in my opinion, ending diagonals are way more common on the currency markets.
Next sub chapter will deal with zig-zags and we will take a look at one of the most important form of corrections in Elliot wave pattern, starting with the rules for it and continuing with the retracement levels for a zig-zag.