medium · Elliott Wave Theory
A contracting diagonal (ending diagonal) is forming as wave 5. Its boundary lines converge, and wave 5 of the diagonal throws over the upper trendline before reversing.
Relative to the channeling expectations of a normal impulse fifth wave, what distinguishes the diagonal's channel behavior and the most reliable post-pattern price target?
- The lines converge rather than run parallel, and the typical reaction carries price back to at least where the diagonal began, often swiftly.
- The lines converge rather than run parallel, and the reaction typically stalls at the diagonal's midpoint, mirroring a normal fifth-wave pullback.
- The lines run parallel like a normal impulse, and price typically reacts only to the end of the diagonal's wave 4.
- The lines diverge as the pattern accelerates, and price typically retraces a Fibonacci 38.2% of the whole diagonal.
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