A diamond pattern is used for detecting reversals: there are two types of diamonds:
- diamond – can be found on downtrends and shows a possible reversal upward
- diamond – can be found on uptrends and usually signals for an upcoming major correction
Once rightly identified, it is one of the most profitable patterns for using reversals for trading strategy.
This pattern occurs when a strong up trending price shows a flattening sideways movement over a prolonged period of time that forms a diamond shape.
Detecting reversals is one of the most profitable trading opportunities for technical traders. A successful trader combines these techniques with other technical indicators and other forms of to maximize their odds of success.
Diamonds shows high probability of reversal only at long-term timeframes such as 1D and higher. Currently we detected the Diamond patter on 1H timeframe chart which has a small trend continuation probability.
If you take a look at 1D timeframe chart there is an imperfect Diamond pattern formed on uptrend price action.
Due to imperfections of the formation the probability of starting global price action is low. However a downward cross of Oscillator lines combined with Diamond chart pattern formation on 1D and 1H signals that correction is coming. Bitcoin can retrace to $47 865 level
DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.