Good day traders! Let’s look at NZDUSD and its Elliott wave pattern.
NZDUSD is pushing higher, unfolding a five-wave overlapping structure within final wave c of 4. This structure looks more and more like an EW ending diagonal, that can once completed unfold a sharp reversal lower towards the 0.68881 level.
An ending diagonal is a special type of pattern that occurs at times when the preceding move has gone too far too fast, as Elliott put it. A very small percentage of ending diagonals appear in the C wave position of A-B- C formations. In double or triple threes, they appear only as the final "C" wave. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.
- structure is 3-3-3-3-3
- a wedge shape within two converging lines
- wave 4 must trade into a territory of a wave 1
- appears primarily in the fifth wave position, in the C wave position of A-B- C and in double or triple threes as the final "C" wave
Ending diagonal example: