Back to Patterns
neutral Signal
Diamond
A diamond pattern combines a broadening formation followed by a symmetrical triangle. Price expands then contracts, forming a diamond shape. It is typically a reversal pattern.
How to Trade
Enter when price breaks out of the diamond. If it appears at a market top, a breakdown is more likely (bearish). At a market bottom, a breakout is more likely (bullish).
Market Psychology
The expanding phase shows growing uncertainty, while the contracting phase shows decreasing volatility as the market prepares for a decisive move. The breakout direction often opposes the prior trend.
Next Lesson
Bullish Flag
Technical Diagram
This visual represents the ideal candle formation and breakout points for the Diamond pattern.