How To Trade With Diamond Chart Patterns

How To Trade With Diamond Chart Patterns

The analysts at IQ Option, a popular online cryptocurrency exchange, do reviews and breakdowns of many different types of technical indicators. In this piece they discuss diamond chart patterns and how to trade them.

For many traders, and especially day traders, technical analysis is a crucial factor in the success or failure of their endeavor. Technical analysis gives traders the opportunity to guess the future price movement of an asset based on mathematical equations and patterns. In  their latest piece, the analysts at IQ Option explain diamond chart patterns and how they can utilized as a technical indicator.

The first thing to look out for is a diamond top pattern; although it does not occur often, when it makes an appearance it could be predicting an upcoming trend reversal in the assets price. To see if the chart is in a diamond chart pattern, look for:

• if the price is trending upward

• if it initially starts fluctuating with peaks being higher than troughs

• the highs and lows are creating a diamond shape (although it doesn’t have to be symmetrical)

The opposite of the diamond top pattern is the diamond bottom pattern, which occurs after a strong downward trend of a trading pair. The diamond represents the battle between buyers and sellers in the specific market. When you see this pattern, a signal for a buy entry is an upwards breakthrough of the resistance lines. This technical indicator requires a lot of practice to master, but can be added to your repertoire of technical analysis tools

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