Elliott Wave Diagonal Patterns are unique wave structures that blend characteristics of both impulsive and corrective moves. Unlike typical five-wave impulses that follow strict rules of alternation and wave behaviour, diagonals are more flexible and often appear at key market turning points—either as a beginning or an end of a trend.

This article explores the two types of Elliott Wave diagonal patterns—leading diagonals and ending diagonals—along with their structure, rules, and how to trade them effectively.

What Are Elliott Wave Diagonal Patterns?

A diagonal is a five-wave structure labelled 1–2–3–4–5 that typically unfolds in a wedge-like shape. These patterns appear in:

• Wave 1 of an impulse (leading diagonal)
• Wave A of a zigzag correction (leading diagonal)
• Wave 5 of an impulse (ending diagonal)
• Wave C of a correction (ending diagonal)

Diagonals maintain the 5-wave count of motive waves, but with key structural differences:

• Waves often overlap, particularly Waves 1 and 4 (not allowed in standard impulses)
• Wave 3 is never the shortest
• Diagonals often form within converging or diverging trendlines

Types of Elliott Wave Diagonals

1. Leading Diagonal

• Appears in Wave 1 or Wave A
• Suggests a new trend is beginning
• Structure: Can be 5-3-5-3-5 (impulsive) or sometimes 3-3-3-3-3 (corrective-like)
• Shows overlapping between Waves 1 and 4
• Indicates a slow, hesitant start to a new trend

Characteristics:

• Less steep than ending diagonals
• Wave 4 often overlaps Wave 1
• Common in market transitions or after large reversals

2. Ending Diagonal

• Appears in Wave 5 or Wave C
• Signals trend exhaustion and upcoming reversal
• Structure: Always 3-3-3-3-3
• Clear wedge formation—converging lines
• Often accompanied by divergence on MACD or RSI

Characteristics:

• Dramatic and steep
• Volume decreases toward the end
• Strong reversals typically follow

Key Rules for Diagonal Patterns

• Wave 3 cannot be the shortest
• Wave 4 typically overlaps with Wave 1 (allowed in diagonals)
• All sub-waves within a diagonal can be zigzags or complex corrections
• Trendlines drawn from Waves 1–3 and 2–4 should form a wedge (converging or expanding)

How to Identify Elliott Wave Diagonals

Look for:

• Five-wave structure with overlaps
• Converging or diverging trendlines (visual wedge)
• A hesitant or weakening price movement (especially in Wave 5 or C)
• Momentum divergence on Wave 5 vs Wave 3 (common in ending diagonals)

How to Trade Diagonal Patterns

A. Trading Leading Diagonals

• Used to enter early into a new trend
• Entry: After completion of Wave 5 and breakout in the direction of the diagonal
• Stop: Just below/above the diagonal’s extreme (depending on trade direction)
• Target: Fibonacci extension of the entire pattern or Wave 3 projection

B. Trading Ending Diagonals

• Used to anticipate trend reversals
• Entry: After Wave 5 ends and price breaks the 2–4 trendline
• Confirmation: Look for MACD or RSI divergence and price rejection
• Stop: Beyond Wave 5 high/low
• Target: Origin of the diagonal or prior Wave 4 zone

Example: Bullish Ending Diagonal Trade

1. A wedge forms on the 1-hour chart in Wave 5 of an impulse.
2. Wave 5 completes with a higher high, but MACD shows a lower high (bearish divergence).
3. Price breaks the 2–4 trendline downward.
4. Enter short trade, stop above Wave 5, and target previous Wave 4.

Diagonal vs Impulse Wave Comparison

Feature	Impulse Wave	Diagonal Pattern
Structure	5-3-5-3-5	3-3-3-3-3 or 5-3-5-3-5
Wave Overlap	Not allowed	Allowed (1 & 4 overlap)
Visual Shape	Channelled	Wedge
Typical Location	Any impulse position	Start (1/A) or End (5/C)
Momentum	Strong	Weak or slowing down

Common Mistakes to Avoid

• Misidentifying normal corrections as diagonals: Look for wave count and structure first.
• Entering too early: Always wait for pattern completion and breakout confirmation.
• Ignoring divergence: Especially in ending diagonals, divergence adds confirmation.

Conclusion

Elliott Wave diagonal patterns offer a powerful method to spot major trend shifts or early-stage moves. Whether trading a leading diagonal as the start of a new trend or an ending diagonal as a reversal pattern, mastering this structure allows traders to anticipate the market’s next move with strategic clarity.

To learn how to confidently count and trade Elliott Wave diagonals, as well as all other advanced wave patterns, enrol in our expert-led Trading Courses at Traders MBA and take your wave trading to a professional level.