Figure 3: Bearish and Bullish Ending Diagonal Patterns
An Elliott Wave Ending Diagonal Pattern (Figure 3) is a terminal pattern within a larger pattern that appears in the fifth wave position. They resemble a classic wedge formation that forms after a climatic advance/decline and are often associated with an exhaustion move that invariably breaks against the prevailing trend. Their internal structure is (3-3-3-3-3) and price action is contained within two converging lines.
Confirmation and Measuring
Confirmation of the completion of the pattern is upon a break of the 2-4 trendline. The extend of price movement in the opposite direction is at least back to the level where the pattern began, often much further, taking 1/3-1/2 the time to build the pattern.