Hey Google: Is that an Ending Diagonal in Your Chart... "Or Are You Just Happy to See Me"?

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Hey Google: Is that an Ending Diagonal in Your Chart... "Or Are You Just Happy to See Me"?
The July12 Elliott Wave Junctures video lesson shows you why an ending diagonal Elliott wave pattern marks a major opportunity: 3 featured markets, including Google (GOOG)

By Nico Isaac
Wed, 18 Jul 2012 15:30:00 ET

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Imagine you're a financial trader standing at the "bus stop" of near-term opportunity for a specific market (i.e., the "bus."). You don't have a schedule handy so you ask the 3 other people at the stop for information on the arriving bus's route. Here's what they say:

Fundamental analyst: "The next bus might be headed north IF the water main leak in that direction has been repaired, OR the flock of geese standing in the street has been removed. Then again, it could still head north even if those external factors don't get resolved. Really, we won't know where the bus is going until after it leaves. "

Technical analyst of traditional indicators: "The low RSI reading indicates that the bus is headed south, but I can't tell you at what point it's going to stop."

Elliott wave analyst: "The rules and guidelines pertaining to the specific Elliott wave pattern on said bus indicate that it should be stopping at the corner of "X" and "Y" street, then making a sharp turn north."

Which analyst would you let map your trip?

Speaking of mapping out future market action, in the July 12 Elliott Wave Junctures video lesson, EWI's senior analyst Jeffrey Kennedy reveals in 5 minutes what 20-plus years of professional experience has taught him; that is:

When it comes to signaling the end of the larger price trend AND beginning of a meaningful new move in the other direction, 1 Elliott wave pattern rises to the top: the ending diagonal.

Minute 1 of Jeffrey's July 12 Elliott Wave Junctures video lists the specific badges of an ending diagonal pattern:

Has a distinct rising or falling wedge shape
5 overlapping waves
Each of the 5 waves subdivides into 3 smaller waves labeled a-b-c
Usually occurs in the wave 5 position of impulses

For example, here's a "falling wedge" ending diagonal in a chart of Union Pacific Corp. stock (UNP):

And now, for the really exciting part: Whenever ending diagonals are complete, they tend to introduce very swift, sharp, volatile reversals. As you can see in the chart above, when the ending diagonal was done in UNP, price reversed and rose sharply.

That's why, if you see this pattern on a market's price chart, you should be very happy indeed!

In the July 12 Elliott Wave Junctures video, Jeffrey shows you 3 real-world examples of ending diagonals in 3 markets. One of them is Google (GOOG) stock chart dating back well into 2011 to current times -- with a huge, multi-month ending diagonal showing! In Jeffrey's own words:

"Keep your eye on Google. If the larger pattern identification is indeed correct, we probably have... a very sharp [move ahead.]"

Learn to navigate the near-term ups and downs in liquid finanical markets. Subscribe to EWI's brand-new, trader-focused Elliott Wave Junctures today.

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Tags: diagonal, Elliott wave, elliott wave junctures, Elliott Wave trading, fundamental analysis, Jeffrey Kennedy, technical analysis

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The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.