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The ending diagonal pattern is typically associated with price exhaustion at the end of an impulsive wave or trend. This pattern is characterized by converging trendlines that form a wedge shape, indicating a slowdown in momentum as price approaches a significant resistance or support level.

As the price movement becomes less vigorous, it signals that the existing trend is losing strength, thus hinting at a potential reversal or a significant shift in market direction. The convergence of the diagonal lines shows that the swings become progressively smaller, emphasizing the exhaustion of the prevailing trend before a possible breakout occurs.

Understanding this pattern is crucial for traders: when they identify an ending diagonal, they can anticipate the likelihood of a change in the market direction, positioning themselves accordingly. This makes the association between the ending diagonal pattern and price exhaustion particularly important in trading analysis.