I know we all hate trading within ending diagonals but the key point to remember about diagonals is that the easy money is not made attempting to trade within that diagonal but rather when that diagonal ends. You see when an ending diagonal ends it almost always will make a very sharp move back towards the origin point of that ending diagonal.

Take a look at the Ending Diagonal that we were tracking in the VXX on the chart below. As you can see on the chart we had an ending diagonal that began at the 36.64 level on 9/29 and took 7 sessions to bottom into the 10/10 low. 3 sessions later we topped almost to the penny of the start of this ED.

Recognizing that you are in an ED pattern and reducing trading during this time will allow you to remain more focused and mentally sharp for when the reversal comes out of these diagonals. Also knowing that these EDs will very often return to there origin points will allow you to have more confidence in your established positions until approaching that point and will also give you a good level to exit those positions, which of course should be quite profitable by that point in time. 

So while some many hate ending diagonals these are actually my favorite pattern to trade and I will always do my best to remain disciplined when I see one forming in preparation for what comes after the ending diagonal ends...

 Elliott Wave Chart

VIX & Forex Trading with Mike Golembesky

About Mike: Michael Golembesky is a featured analyst at ElliottWaveTrader.net, focusing on Forex and the VIX. Mike is a renowned practitioner and educator in applying Elliott Wave analysis to trading forex and volatility instruments. He is a popular speaker at financial forums and conferences in the U.S., including The Traders Expo and The Money Show, and widely syndicated on sites including MarketWatch, Seeking Alpha, and Nasdaq.com.

About our Forex Service: Co-hosted with Arkady Yakhnis, the service features chart analysis and alerts on trading opportunities in both the major and minor forex pairs, posted live in the Trading Room and available by email alerts. The six majors are EURUSD, GBPUSD, USDJPY, USDCHF, USDCAD, and AUDUSD.

See a recent Webinar by Mike on applying Elliott Wave analysis to Forex trading.

About our VIX Service: This service features Mike's day and swing trade alerts on the VXX and XIV as well as options on those ETFs. The alerts are posted live in the ElliottWaveTrader room and available by email.

See a recent Webinar by Mike on VIX trading opportunities.

Market Alerts Service at ElliottWaveTrader with Avi Gilburt

About Avi: Avi is founder of ElliottWaveTrader.net, a live trading room and member forum focusing on Elliott Wave market analysis. Avi emphasizes a comprehensive reading of charts and wave counts that is free of personal bias or predisposition. A lawyer and accountant by training, he is also managing member of Gilburt Financial Services, LLC, which provides financial markets analysis and consulting. His Elliott Wave analysis appears frequently on sites such as MarketWatch, Minyanville, and SeekingAlpha, where he is a certified contributor.

About Avi's Market Alerts Service: Our flagship service covering U.S. equity indices, bonds, precious metals, energy & US dollar, plus market sentiment analysis & cycles/internals, hosted by Avi Gilburt and our analyst team.