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How to Build a Solid Strong Foundation For Day Trading
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How to Choose The Best Chart Time Frames For Day Trading
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How to Short Sell & Deal With Short Squeezes
How to Avoid Blowing Up Your Account
How to Use Support & Resistance
How to Trade Profitable Technical Indicators & Overlays That Work Well For Day Trading
How to Identify Market Directions Using EMA
How to Identify Market Directions Using MACD
How to Identify Overbought and Oversold Conditions Using RSI
How to Use Bollinger Bands to Buy Low Sell High
How to Trade Profitable Chart Patterns That Work Well For Day Trading
How to Trade Broadening Tops and Bottoms
How to Trade Wedges and Triangles
How to Trade Flags and Pennants
How to Trade Gaps
How to Trade Double Tops and Bottoms
How to Trade Rounding Tops and Bottoms
How to Trade Diamond Tops and Bottoms
How to Trade Cup and Handle
How to Trade Head and Shoulders
How to Trade Dead-Cat Bounces
And a lot more...
Diamond Chart Patternsubmitted by alfafinancials5 to u/alfafinancials5 [link] [comments]
The diamond chart pattern is one of the reliable chart patterns mostly used by the day traders to identify the potential uptrend reversals. The bearish diamond’s occurrences are far more prevalent than their bullish counterparts. The diamond pattern has enabled a large number of traders to make quick profits.
Forex trading markets, because of their high liquidity, gives way to more diamond formations than any trading counterpart.
Cutting the Diamond Bear An offset head & shoulders formation is chosen for the trend lines to be sketched. The left shoulder and the head are connected through a straight line. The head is then connected to the peak of the right shoulder. This forms the upper boundary of the diamond. The price must not break the boundary for it to remain in the pattern.
For the lower part, the left shoulder is again connected to the trough formed after the head which is then connected to the right shoulder.
Identification: Diamond vs Head & Shoulders It is not hard to get confused with the pattern of head & shoulders and diamond as they mirror each other. The offset nature of the head & shoulders pattern can be identified by the head located closer to the left shoulder and the tail slightly closer to the right. And the neckline will always struggle to be a straight line.
Entry The right time to take the trade is by the completion of the pattern. The breakdown is most likely to happen right after the formation of the diamond, so shorting at the end of the right shoulder could prove to be beneficial.
Exit The safest exit is marked from the right shoulder with the difference in value between the highest Peak and the deepest crevice within the pattern. The diamond pattern’s breakdown has more profit potential than just the difference between the peak and trough, but, more than that is a risk.
Stop-Loss Stop loss is a counter-measure to limit your losses in case of the failure of your analyzed pattern. It is most advised to place the stop loss at the last peak formed before the completion of the diamond.
Bullish Diamond Pattern Bullish diamond chart pattern, also known as the diamond bottom is also an existing pattern which is straight opposite to what we have seen, except for the profit potential. It is used to identify the downtrend reversal, but their formation is scarce when compared to the bearish diamond tops.
For the Bullish diamond pattern, the entry is the same as that of the diamond top, but the exit by the uptrend and the stop loss is placed at the last trough formed inside the pattern.
Before trying the learned chart analysis pattern in real time, use the historic trading charts to check if you can identify the right pattern. Novice traders, because of their overwhelming enthusiasm, often put their knowledge to work before testing it out and incur heavy losses. Learning diamond pattern makes no difference if you don’t practice and hone your skills.
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A less talked about but equally useful pattern that occurs in the currency markets is the bearish diamond top formation, commonly known as the diamond top.In this article, we'll explain how forex ... At first glance, a diamond pattern may look like little more than head and shoulders top patterns with "crooked" necklines but this only tells half of the story.In reality diamond patterns are more like broadening top formations because they normally only reverse upward trends. In this sense, they are always about distribution. Diamond Top pattern. The following chart, Figure 2 shows an illustration of a diamond top pattern. It works on the exact same principles of a diamond bottom pattern but in the opposite direction. Figure 2: Diamond Top Pattern . One of the easiest ways to identify these patterns are that they are formed either at the top of the trend or at the ... Note that the diamond top pattern is often confused with the head-and-shoulders formation. Carefully assess the patterns in order to make an informed decision. Diamond bottoms pattern An opposite of the diamond tops is the diamond bottoms formation which occurs after a strong downward trend on a security or currency pair. An example of a diamond bottom formation. Price dropping into the ... The Diamond Chart forex trading strategy is a reversal price action pattern that is relatively rare to spot on the activity chart. Howbeit, the pattern is triggered in the form of a diamond top (bearish signal) and diamond bottom (bullish signal), and usually typifies a period of congestion before a new trend emerges in the market. Chart Setup. MetaTrader4 Indicators: cci_.ex4 (Input Variable ... The diamond top pattern is not a common formation but is considered a strong bearish reversal pattern amongst technical analysts. This bearish reversal pattern expands into a high and contracts after a low into a narrower range, until price breaks out below the support line and completes the pattern. With price first expanding and then contracting, analysts use trendlines to define this ... The diamond chart pattern is a very rare and exceptional form of chart formation which looks same like the head and shoulder or an inverted head and shoulder pattern. It is a reversal pattern which appears in a V shape. The diamond patterns will not frequently occur in the market bottoms and it usually takes place during the major top. As these diamonds chart pattern executes as a variant of ...
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