Expanding Diagonals

   Till a few years ago, I used to think that expanding Diagonals are pretty rare. The fifth wave in the 2003-08 bull market in the Nifty from 2006 to 2008 was one such rare appearance. Then I found one developing in real time in 2017 from march onwards, but counted it finishing too early.

Nifty 2006-08 ED. No wave labels reqd.

2017 ED. still had miles to go.

Larger context of 2017 ED. It finally topped in January 18

    However, in recent times I am finding them all over the place or maybe I'm able to. It's a perfect foil to form as an impulse alternating in form as an adjacent wave to a regular impulse and simultaneously extend as well. The expanding diagonal basically allows differently sized waves to form a part of itself with full disregard to proportionality. This is generally a nightmare for wave counting. Worth noticing how the 'B" waves of the zigzag components of the ED keep increasing in size as well, contributing in no small part to to the potential counting errors.

  Here are some recent examples. Nifty from the march 2020 lows to the October 2021 highs has formed a zigzag, wave A of which was an impulse lasting all of 4 trading days only! Wave B was a running triangle followed by wave C which formed a superb expanding diagonal(ED), lasting 17 months.

    The fifth zigzag of this ED had as its C wave, another expanding diagonal (yellow lines in chart above). One has to choose an intraday chart to clearly show the miniscule waves 1 and 2. Talk about disproportionality. 

check out the last wave post triangle. Its also an ED

   After the October 21 top in the nifty at 18604, as the wave 2 corrective zigzag started, its wave 'A' formed a clear ED. The rare examples I have seen of a wave 1/A forming an ED has been in declining waves.

No Wave Labels. Self Explanatory

   In the US, the DJIA/S&P500 have from the 2009 lows have formed a zigzag whose wave C has a massive ED since 2011, which is on the verge of completion. Worth noticing here is the lower boundary is not defined by wave 4, but by the 'B' wave of the 5th zigzag. No rules/guidelines broken here. Par for the course. 

Wave labels not as per convention

   Finally, one of the myths I initially had was that wave 4 would necessarily overlap the territory of wave 1. While possible, not required as can be seen.