Diagonal
A diagonal is a motive pattern where the waves overlap and form a wedge shape between two converging or diverging trendlines. Unlike standard impulse waves, diagonals allow Wave 4 to enter Wave 1 territory. All five sub-waves subdivide into threes (3-3-3-3-3), which gives them a different internal character from impulse waves. There are two types based on position. Leading diagonals appear in the Wave 1 or Wave A position, signaling the start of a new trend with some initial uncertainty. Ending diagonals appear in Wave 5 or Wave C position, signaling exhaustion and an imminent reversal. Ending diagonals are far more common and more useful for trading because they tell you the trend is running out of steam. The price action inside a diagonal looks choppy and overlapping, which makes it hard to identify in real time until several waves have completed. After an ending diagonal completes, the reversal is usually sharp and fast, often retracing back to where the diagonal started.
Bitcoin rallies in Wave 5 but the advance looks labored with overlapping waves forming a rising wedge. Each sub-wave within this ending diagonal subdivides into three waves. Once Wave 5 of the diagonal pokes above the upper trendline and reverses, Bitcoin drops 15% in two days, retracing the entire diagonal. That sharp reversal is the signature of an ending diagonal completion.