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Bulkowski's Leading Diagonal Triangle

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As of 11/20/2019
  Indus: 27,821 -112.93 -0.4%  
  Trans: 10,695 -152.59 -1.4%  
  Utils: 855 +6.70 +0.8%  
  Nasdaq: 8,527 -43.93 -0.5%  
  S&P 500: 3,108 -11.72 -0.4%  
YTD
 +19.3%  
 +16.6%  
 +19.9%  
 +28.5%  
 +24.0%  
  Targets    Overview: 11/14/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,400 or 10,600 by 12/01/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,200 or 3,025 by 12/01/2019
As of 11/20/2019
  Indus: 27,821 -112.93 -0.4%  
  Trans: 10,695 -152.59 -1.4%  
  Utils: 855 +6.70 +0.8%  
  Nasdaq: 8,527 -43.93 -0.5%  
  S&P 500: 3,108 -11.72 -0.4%  
YTD
 +19.3%  
 +16.6%  
 +19.9%  
 +28.5%  
 +24.0%  
  Targets    Overview: 11/14/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,400 or 10,600 by 12/01/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,200 or 3,025 by 12/01/2019

Written by and copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.

This page describes the leading diagonal triangle of the Elliott wave principle, how price moves not in a straight line but in a series of rises and retracements.

 

The leading diagonal triangle wave. The leading diagonal triangle, or wedge as many call it, is a narrowing price move composed of two converging trendlines occurring in a wave 1 position of impulses or wave A position of zigzags. The chart to the right shows the ideal example without any subwaves highlighted.

Notice that wave 4 overlaps wave 1, just as it does in the ending diagonal triangle pattern. However, the ending diagonal triangle has a 3-3-3-3-3 subwave structure, but the leading diagonal triangle shows a 5-3-5-3-5 pattern. The next chart makes this clear.

Frost and Prechter write,

"The structure of this formation fits the spirit of the Wave Principle in that the five-wave subdivisions of the actionary waves communicate a 'continuation' message as opposed to the 'termination' implication of the three-wave subdivisions in the actionary waves of the ending diagonal."
I have no idea what that means, but I couldn't have said it better myself. They go on to write that Elliott did not discover this pattern, but Frost and Prechter believe it is valid.

About identification, they go on to write,

"The main key to recognizing this pattern is the decided slowing of price change in the fifth subwave relative to the third. By contrast, in developing first and second waves, short term speed typically increases, and breath (i.e., the number of stocks or subindexes participating) often expands."

 

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The leading diagonal triangle in a bear market. The chart to the right shows the leading diagonal triangle in a bull market with the subwaves marked. For the purposes of illustration, think of subwaves as line segments. Wave one has five subwaves and wave two has three subwaves. The shape of the leading diagonal triangle is composed of 5-3-5-3-5 subwaves.

Frost and Prechter did not mention a bearish version of the leading diagonal triangle. If it exists, it would look like the chart flipped upside down.

Leading Diagonal Triangle Rules

The leading diagonal triangle has rules that govern its shape. They are listed here.

  • The subwave action usually follows two converging trendlines.
  • Subwave four often overlaps subwave 1.
  • The subwave count is 5-3-5-3-5.
  • The leading diagonal triangle usually occurs as part of wave one of impulses or wave A of zigzags.

-- Thomas Bulkowski

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See Also

Written by and copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners. Bumper sticker: Honk if you want to see my finger.