On the 4-hour chart of USD Index, the price made a strong and sharp turn recently, which is now an indication that low has been put in place after the formation of an ending diagonal, so more upside is expected to follow. Technically speaking we expect a three wave rise to follow, with index currently trading within corrective Wave 2/B as part of this rise.
USD Index, 4-hour
An ending diagonal is a special type of pattern that occurs at times when the preceding move has gone too far too fast, as Elliott put it. A very small percentage of ending diagonals appear in the C wave position of A-B- C formations. In double or triple threes, they appear only as the final “C” wave. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.
- Structure is 3-3-3-3-3
- A wedge shape within two converging lines
- Wave 4 must trade into a territory of a Wave 1
- Appears primarily in the fifth wave position, in the C wave position of A-B- C and in double or triple threes as the final “C” wave
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