Diagonal Triangles (Wedges)
Diagonal waves explained in a simple way.
What is a Diagonal?
A Diagonal looks like an impulse wave because it moves with the trend and has 5 waves (1–2–3–4–5). But there is one big difference:
Wave 4 goes into Wave 1 price area. (They overlap!)
That never happens in a normal impulse. So we know we are looking at a diagonal when we see a wedge shape and overlap.
Diagonals show that the trend is getting tired or starting slowly. People are fighting about direction.
Two Types of Diagonals
- Leading Diagonal → starts a new trend
- Ending Diagonal → ends a trend
Knowing which one it is helps you predict the next move.
Leading Diagonal
Leading diagonals appear only in:
- Wave 1 of a new trend
- Wave A of a correction
Structure: 5–3–5–3–5 (Wave 1, 3 & 5 = look impulsive, Wave 2 & 4 = look corrective)
- Wave 4 and Wave 1 overlap
- Wave 2 cannot go past the start of Wave 1
- Wave 4 cannot go past the start of Wave 3
- Wave 1 is longest and Wave 5 is shortest (in contracting ones)
- Wave 5 does **not** truncate (it reaches a new price extreme)
Meaning: The new trend is starting, but slowly. Traders are unsure at first.
Ending Diagonal
Ending diagonals appear only in:
- Wave 5 of an impulse
- Wave C of a correction
Structure: 3–3–3–3–3 (Every wave looks corrective — zigzags inside)
- Wave 1 and Wave 4 must overlap
- Wave 4 cannot go past the start of Wave 3
- Wave 2 cannot break the start of Wave 1
- Wave 3 cannot be the shortest
- Wave 5 can truncate — showing extreme exhaustion
Meaning: The trend is running out of energy. A strong reversal is coming soon.
Rules (Easy version)
- 5 waves inside the wedge
- Waves 1 & 4 overlap (this is the big clue!)
- Draw lines through 1→3 and 2→4 → they must form a wedge shape
- Wave 3 cannot be the shortest
Important: Even though Fibonacci can work… We do NOT base diagonal trading on Fibonacci.
How to Identify a Diagonal
- Waves look like a wedge — not a straight channel
- Wave 4 enters Wave 1 area
- Price movement becomes weaker near the end
- Momentum slows down → trend exhaustion
Trading Tips
🎯 Best place to trade?
When the diagonal ends!
- Ending diagonal: big reversal trade → price flies backward fast
- Leading diagonal: wait for Wave 2 correction → then enter Wave 3 (the strongest wave!)
⚠️ Do NOT trade inside diagonals. Too messy.
🔬 Practical Exercise
- Find a chart top or bottom (BTC, S&P, etc.)
- Look for a wedge shape of 5 waves
- Check if Wave 4 overlaps Wave 1
- Draw two trendlines → 1→3 and 2→4
- Watch what happens after Wave 5 ends
🔑 Chapter Summary
- Diagonals are motive waves but not impulses
- They allow overlap → Wave 4 over Wave 1
- Leading diagonals start trends → in Wave 1 or A
- Ending diagonals finish trends → in Wave 5 or C
- Trade after the diagonal completes