medium · Elliott Wave Theory complex
A trader identifies a sideways combination (W-X-Y) where wave W is a zigzag. Wave X rallies from 50 to 65 (after a 40-point decline in W). Wave Y is a flat.
If the move from 50 to 65 contains three sub-waves, but sub-wave C is a diagonal triangle, is the X-wave label valid?
- Yes, but only if the diagonal is a leading diagonal, since ending diagonals are forbidden inside any connector.
- No, diagonal triangles are motive waves and can never appear anywhere inside a corrective X-wave.
- Yes, an X-wave can end in a diagonal triangle because wave C of any corrective pattern can be an ending diagonal.
- No, an X-wave containing a diagonal must instead be relabeled as a double zigzag, not a double three.
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