The ending diagonal pattern is one of my favorite Elliott Wave patterns. It offers defined risk and focused rewards typically yielding excellent risk:reward ratios.
As you can see from the chart above, this ending diagonal is counted to finish at least 3 degrees of trend ('C' wave could also be the ending a multiple zig zag making it 4 degrees of trend).
A break of Friday's low of 2.1405 builds the case a top is in. The conservative target on this is the origination of the diagonal pattern at 2.08. Since this is an ending wave at multiple degrees, lower potential exists to at least 1.94.
Got it! the other degrees of trend terminate, I presume, above (v) and are not visible on your chart
Cool66
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Hi, you mention degrees of trend. Could you please explain. Thanks.
JWagnerFXTrader
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Sure Cool66.
Degree of trend is similar to saying different time frames of chart. Different degrees of trend means you have multiple 'time frames' sporting a pattern that is an ending pattern.
In the case of GBPNZD, the ending diagonal is one of my favorite patterns and it occurs in ending waves. As we see from price, the ending diagonal was not fulfilled...it was some other pattern.
My USDJPY daily chart (see below) is another example of several degrees of trend or 'time frames' showing ending waves. That trend is mature.
Feel free to ask more questions about it.
JWagnerFXTrader
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This move higher creates a wave 3 that is shorter than wave 1 and 5. Therefore, the ending diagonal pattern is negated. Fortunately, the risk on the trade was relatively small.
Moving on to other charts.
x3000jj
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i got stopped out are considering going entering again
JWagnerFXTrader
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The charts must use bid prices...when you are short, you'll get closed out at the ask price.
Longer term, it is a big bearish pattern. Do you have a wave count you are following on the short term?
x3000jj
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so are you still in this trade
i dont know what wave counts yet
JWagnerFXTrader
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No, I was kicked out of the trade as well. These trades where you get stopped by a pip are painful emotionally. I have a 24 hour revenge trading rule that I'll be invoking to cool off from this one. Perhaps a breakout trade below yesterday's low if it runs to the downside. With RBNZ coming out in a couple hours, its best to wait and see for now.