The Diamond Top is a trend reversal chart pattern. It is formed by two symmetrical juxtaposed triangles, thus forming a diamond.
A Diamond Top must be preceded by an uptrend. This figure marks the weakening of the buying trend and the indecision of investors. Volatility and swings are increasing in the first half of the pattern, then decreasing in the second half of the pattern.
The price target of a Diamond Top is calculated by reporting the minimum height of the diamond at the exit point.
In general, the exit movement is as fast as the upward movement that preceded it.
Notes and Statistics: #
- Top diamonds appear 3 times more often than bottom diamonds.
- Occasionally, the price forms an head and shoulders within the diamond top pattern.
- The diamonds pattern are very difficult to spot, and often forgotten by traders.
- In 80% of cases, there is a bearish exit.
- In 95% of cases, the objective of the pattern is reached.
- In 59% of cases, a pullback occurs on the support.