HomeCHART PATTERNDiamond Pattern Explained

Diamond Pattern Explained


The diamond pattern is a price action formation that is created on a chart by buyers and sellers. It is a lesser-known chart pattern to technical traders than many of the more popular patterns.

This formation is a less frequent and more uncommon reversal pattern on a chart than pennants and flags. It can happen close to a chart’s high points or low points, generating a diamond top or diamond bottom pattern. Both the diamond bottom and the diamond top can be bullish or bearish. Both have a pattern that is recognizable and indicate that the present trend may be coming to an end, but the significance of each signal depends on where on the chart it appears.

A diamond chart pattern starts by first forming a broadening formation with ascending resistance and declining support that is followed by a triangle formation that has descending resistance and ascending support. It is the breakout of the second half of the diamond pattern that signals the entry whether it is a bullish break over resistance or bearish break under support. 

A clear uptrend must be in place before a valid bearish reversal signal. A clear downtrend must be in place before a valid bullish reversal signal.

Diamond Pattern

Previous article
Next article


Technical Analysis For Beginners (The Ultimate Guide)

Technical analysis is the art and science of reading charts to quantify the trend or trading range price is in, the path of least resistance for the next directional move, the area of value on the chart, and create good risk/reward ratios by defining key technical levels.

Common Mistakes in Technical Analysis

Technical analysis can be both an art or a science based on how you use it. It is very easy to become too rigid in its practice believing it can become too flexible whatever you want to see. 

Moving Averages Indicator Work

Moving Averages Indicator 10 Reasons moving averages work as trading tools. Moving averages filter trends in different timeframes. Moving averages can create entry signals at the beginning of...

What Are The Best Technical Indicators?

Technical indicators give traders ways to quantify and measure price action. A technical indicator can show the direction of the current trend, volatility, momentum, and whether a market is overbought or oversold.

Follow us


Most Popular


- Advertisement -spot_img