Diamond Top Pattern
Learn to recognize and trade a diamond top pattern through interactive charts.
What is a diamond top pattern?
A Diamond Top is a bearish reversal pattern, which usually happens after a considerable run-up in prices. It suggests that a downtrend is imminent.
Download our free chart patterns PDF for a guide to 20 classical chart patterns with over 100 interactive charts, also on TradingView.
A diamond pattern can occur over various time frames.
A diamond pattern is encapsulated within 4 trendlines. It starts as an expanding triangle, before morphing into a converging triangle. It can also be likened to a head and shoulders pattern with a ‘V’-shaped neckline.
A diamond has no volume requirements. However, it is common to see trading volumes rise as volatility increases in the first half of the pattern, and fall in the second half of the pattern.
Diamond trading tips
This pattern completes when the price breaks down below support. This breakout should happen on rising volume. Some traders wait for a successful re-test of the trendline before opening a short position, to ensure that support now acts as resistance. You may want to wait for several daily closes below resistance.
Share this article:
About the author
I'm Stéphane, a trader and an entrepreneur. My mission with TrustedBrokers is to help you find the right broker for you, whether you're a beginner or a pro. I've personally used and tested the brokers on our service, opening and funding real-money accounts, contacting customer service and placing trades. I started my career in investment banking in London.