Diamond Tops Chart pattern

• The pattern is observed after a huge upward trend.
• The price at the start of the pattern is higher than the price at the start of the trend.
• Higher peaks and lower valleys are observed in the first half of the pattern. Later this reverses, i.e., lower peaks and higher valleys are observed in the second half.
• When all the peaks and valleys are connected, four trend lines are formed in the shape of a diamond and hence the pattern is given the name ‘diamond tops’.
• In the first half, the top trendline slopes upwards and the bottom trendline slopes downwards. In the second half, the top trendline slopes downwards and the bottom trendline slopes upwards.
• The breakout can occur in either direction when the price cuts through the established trendline. Trend continual or trend reversal depends on the direction of the breakout.
• However, trend reversal takes place in most of the cases.

• Traders should look into the probability of trend continual and trend reversal, before entering the trade. There is a downward trend 57% of the time.
• Traders can enter the market depending on the direction of the breakout. If there is a trend continual, traders can mark the resistance line and go long in the market. If there is a trend reversal, traders can mark the support line and go short in the trade.

Diamond Bottoms Chart pattern

• It is similar to the diamond tops chart pattern, the only difference is the trend.
• The pattern is observed after a huge downward trend.
• The price at the start of the pattern is lower than the price at the start of the trend.
• Higher peaks and lower valleys are observed in the first half of the pattern. Later this reverses, i.e., lower peaks and higher valleys are observed in the second half.
• When all the peaks and valleys are connected, four trend lines are formed in the shape of a diamond and hence the pattern is given the name ‘diamond bottoms’.
• In the first half, the top trendline slopes upwards and the bottom trendline slopes downwards. In the second half, the top trendline slopes downwards and the bottom trendline slopes upwards.
• The breakout can occur in either direction when the price cuts through the established trendline. Trend continual or trend reversal depends on the direction of the breakout.
• However, trend reversal takes place in most of the cases.

• Traders should look into the probability of trend continual and trend reversal, before entering the trade. There is an upward trend 72% of the time, when price closes outside of one of the trendline boundaries..
• Traders can enter the market depending on the direction of the breakout. If there is a trend continual, traders can mark the resistance line and go long in the market. If there is a trend reversal, traders can mark the support line and go short in the trade.