Here’s a look at the daily chart on the EUR/USD.

I have drawn out what could be an ending diagonal. I’m not that confident as the pattern is very messy however with the triple rejection at the top I would expect a little more re-tracement downward in the near term. (next day or two).  This would create the correct overall look however the internal wave structure is not typical.

A visit to and then a turn up off the bottom trend-line would bolster this view.

Of course a break to new highs without further pull-back, leaves to the door open to a completely different possibility.

What does support this view is that the target for the top of wave three (which is where the multiple wicks are) is very often quite close to the previous high as it is in this case. That provides the trigger for a wave 4 pull back and then a return to the upside for the final top that typically forms a double top with the old wave 3 high.

When looking at a pattern like this a trader must ask himself: Is this pair basing to go higher or is it retracing before continuing lower?

In Elliott wave theory there is a pattern referred to as a leading diagonal. There is also a pattern that is very common that is a triangle and appears in the 4th wave position. In these two cases the outcome price directions are opposites.

At this time the current pattern fits both criteria. This happens fairly regularly as it is much easier to read theses patterns after they complete. During the forming process it can be rather subjective.

So, the best thing to do is look for all the possibilities and trade the one that shows the most promise at a time of reversal or break-out.

If you don’t know Elliott Wave theory, that’s OK because you can simply use good judgment around trend-lines. The key is to pick your entries where risk is limited.

Had I been observing the charts when the top candle formed on the hourly chart I would have considered a sell trade with a stop at the high. I might still, if the price rebounds back toward the line then resumes a downward direction.

So wait for the opportunities and trade accordingly.