$DG - LEADING DIAGONAL - LESSON CASE STUDY

OK a few people asking whether or not $DG is still valid because Wave 4 infringed upon Subwave 2.

Good question and I like how people are watching to see if the rules of EWT are being followed but lets take a look at Lesson 4 Part B.....so there are two exceptions when the waves can overlap on each other, if it is the start of a new impulse wave, Wave 1 (leading diagonal) or the end of an impulse wave, Wave 5 (ending diagonal)

So in this case, we can see that this is the very start of an impulse wave, as Wave C fell very aggressive in October '23, which is a clear sign of capitulation and usually signals the end of a corrective wave and now we are into the start of an impulse wave again.

A good sign to watch for to see if this was an leading diagonal is to observe how Subwave 4 pulls back, is it pulling back in 3 waves as we would expect for a subwave 4 and is it pulling back to a standard Fib level we would expect for a wave 4....in both cases here, the answer is yes.

And the price is holding above the 200 Day MA which is also an indication of a bullish trend.

Good observation but always remember to evaluate whether this is the start or the end of an impulse wave.

Lesson 4 - Part B

4 Nov 2023

- Leading Diagonal (LD)

What is a Leading Diagonal Wave?

A leading diagonal is a special type of Elliott wave pattern that occurs at the beginning of a new trend. It is a motive wave that is characterized by five sub-waves, labeled 1, 2, 3, 4, and 5, but it does not follow the traditional Elliott wave rules.

Characteristics of Leading Diagonals

Leading diagonals have the following characteristics:

• They typically occur at the beginning of a new trend.

• They are motive waves, meaning that they move in the direction of the overall trend.

• They have five sub-waves, labeled 1, 2, 3, 4, and 5.

The main point of a Leading Diagonal Wave is that they start at the beginning of a structure and waves can overlap each other, as shown above. 

Usually Wave 4 can not infringe on Wave 2 territory, but in a Leading Diagonal Wave, this is allowed. This ONLY happens in Wave 1 or Wave A.

Leading Diagonal Wave Rules:

- Rule # 1 - Wave 2 never falls below the starting point of Wave 1.

- Rule # 2 - Wave 3 is often the longest wave, but never the shortest of the waves 1-3, and 5. Wave 3 can be shorter than wave 1 or wave 5, but can't be shorter than both.

- Rule # 3 - Wave 4 must hold above the start of Wave 2.