A leading diagonal it is easy to be recognized as it is usually taking the shape of a wedge, but that is not mandatoring. What it is always happening on a leading diagonal is the fact that the overlapping process appears, and that means the fourth wave comes into the territory of the first wave, and such a phenomena is allowed when dealing with leading diagonals.
Also, on a leading diagonal, if you take a trend line from the end of the first wave, connect it with the end of the third wave and project it forward, it should be noted that price action in the fifth wave has the tendency to make a new high compared with the one made on the third wave, but this trend line should not be pierced. But this is just more of a guideline for leading diagonals then a rule.
Under the guidelines for a leading diagonal, meaning common things that usually are happening in such a pattern, we have the following:
- the second wave of a leading diagonal is usually a zig-zag;
- generally speaking, the second wave should be bigger than 35% when compared with the first wave;
- the same is valid for the fourth wave, which should be bigger than 35% of the third wave;
- the fifth wave is usually bigger than the fourth wave;
- it is typical for the fifth wave to end before reaching the channel line (note that it is not mandatory);