Today, February 10, I sit down with Elliott Wave International's chief commodity analyst and Futures Junctures Service editor Jeffrey Kennedy to discuss his favorite wave pattern of all: the diagonal triangle.
Nico Isaac: You say if you had to pick just ONE of all 13 known Elliott wave structures to spend the rest of your technical trading life with, it would be diagonal triangle. First, tell us what the diagonal is.
Jeffrey Kennedy: The diagonal is a five-wave pattern labeled 1 through 5, in which each leg subdivides into three smaller waves: 3-3-3-3-3. Unlike motive waves, however, diagonals are the only five-wave structures in the direction of the main trend in which wave 4 almost always moves into the price territory of wave 1.
NI: So, what makes this pattern so darn special?
JK: The diagonal is a terminating pattern. They can only occur in waves 5 of impulses or C-waves of corrections. This is why they're so exciting. Diagonals precede a dramatic change in trend. And, when they end, prices tend to retrace the entire pattern, or more, and fast -- in 1/3 to ½ the time it took the pattern to form.
Put simply: If you see a diagonal, you know the train of change is coming into the station.
NI: Well, in the February 7 Daily Futures Junctures (on-line now with a risk-free subscription) you do, in fact, see a diagonal underway in the recent price action of a major commodity market. There, you present the following Elliott wave chart:
JK: Yes. This is a classic ending diagonal unfolding in the final wave of the larger trend. As you can see, prices are progressing in a wave (C) to complete the diagonal structure. And, if my wave count is correct, this market's prices are about to board the "Exciting Turn" Railway.
NI: Thank you so much for taking the time to explain the ins and outs of your favorite structure, the diagonal. And also, for alerting readers to the possible DRAMA in store for this major commodity market thanks to this Elliott wave pattern.
You can see the most current 5 full Daily Futures Junctures publications -- which includes Elliott wave-labeled price charts, detailed written analysis, and live video commentary on the near-term trend changes in store for the market featured today, in addition to corn, cocoa, live cattle, and many more -- via a risk-free
Futures Junctures Service subscription.
Details below.
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Futures Junctures Service Includes:
Daily Futures Junctures:
Every weekday, you’ll get the single best Elliott wave opportunity in softs, grains and meats. This detailed daily forecast includes clearly labeled price charts and plain-spoken analysis of the commodity market that shows the highest probability for a big move. Every Friday, the Weekly Wrap-Up will deliver Elliott wave forecasts of up to 18 different markets, including Jeffrey's thorough video analysis of the two or three most promising opportunities. You'll also get weekly updates on three powerful sentiment indicators: COT, DSI and the FJ-exclusive ICP (see "reason 2" below).
Monthly Futures Junctures:
Every month, you'll receive an in-depth analysis of the most promising long-term opportunity, plus intermediate- and long-term forecasts of a dozen other commodity markets. Along with valuable long-term coverage, each issue also includes a Trader's Classroom lesson, which offers practical tips and techniques to help sharpen your wave-trading skills.
Elliott Wave Theorist:
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