Diamond Top Pattern

Learn to recognize and trade a diamond top pattern through interactive charts.

By Stefan

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.

Interactive charts:

Download our free chart patterns PDF for a guide to 20 classical chart patterns with over 100 interactive charts, also on TradingView.com.

Diamond duration

A diamond pattern can occur over various time frames.

Diamond characteristics

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.

Trading volumes

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.

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