As of 12/20/2024
Indus: 42,840 +498.02 +1.2%
Trans: 15,892 +32.54 +0.2%
Utils: 986 +14.76 +1.5%
Nasdaq: 19,573 +199.83 +1.0%
S&P 500: 5,931 +63.77 +1.1%
|
YTD
+13.7%
0.0%
+11.9%
+30.4%
+24.3%
|
 44,200 or 41,750 by 01/01/2025 16,100 or 17,700 by 01/01/20251,050 or 975 by 01/01/202520,500 or 19,300 by 01/01/20256,100 or 5,775 by 01/01/2025 |
As of 12/20/2024
Indus: 42,840 +498.02 +1.2%
Trans: 15,892 +32.54 +0.2%
Utils: 986 +14.76 +1.5%
Nasdaq: 19,573 +199.83 +1.0%
S&P 500: 5,931 +63.77 +1.1%
|
YTD
+13.7%
0.0%
+11.9%
+30.4%
+24.3%
| |
|
44,200 or 41,750 by 01/01/202516,100 or 17,700 by 01/01/20251,050 or 975 by 01/01/202520,500 or 19,300 by 01/01/20256,100 or 5,775 by 01/01/2025 | ||
For more information on this pattern, read
Encyclopedia of Chart Patterns
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Statistics updated on 8/26/2020.
Diamonds are as tough to spot as night crawlers in the grass on a summer night. Most often, you'll find diamond bottoms in a bull market with an upward breakout. A redeeming quality of diamond bottoms is that a quick rise sometimes follows a quick decline.
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Diamond Bottom
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|
The above numbers are based on 477 perfect trades. See the glossary for definitions.
| Characteristic | Discussion |
| Price trend | Downward leading to the pattern. |
| Shape | Looks like a diamond, but usually one tilted to the side. |
| Trendlines | Prices form higher peaks and lower valleys (a broadening pattern) in the first part of the pattern, then price action narrows with lower peaks and higher valleys. Trendlines outline many of the peaks and valleys, forming a diamond shape. |
| Touches | Prices will touch each trendline once or twice. Don't worry if your lines cross some of the price outliers. |
| Volume trend | Downward trend 67% of the time. |
| Breakout | Upward 74% of the time, when price closes outside one of the trendline boundaries. |
Consult the associated figure on the right.
| Trading Tactic | Explanation |
The Measure Rule
Price Trend
Half Staff
|
| Measure rule | See the measure rule figure to the right. Compute the height from the highest peak (A) to the lowest valley (B) in the pattern and then multiply it by the above 'percentage meeting price target.' Add it (upward breakouts) or subtract it (downward breakouts) from the breakout price (blue line) to get the price target (C). | |
| Price trend | See the price trend figure to the right. If price makes a quick, nearly vertical drop (A) leading to the diamond and the breakout is upward, expect price to recover back to the price at which it started the plunge (B). Also, price must have something to reverse. Diamonds with short-term (less than three months) or intermediate-term (three to six months) price trends leading to the diamond perform best, depending on market condition and breakout direction. | |
| Half staff | See the half staff figure to the right. If the diamond acts as a continuation pattern, meaning that price exits (C to D in the same direction as it entered the pattern (A to B), then the diamond can act as a half-staff pattern (half the move is still ahead). The move after the breakout (CD) will often fall short, so look for overhead resistance or underlying support where price might stall. | |
| Price velocity | High velocity moves after the pattern often follow high velocity moves leading to the pattern. | |
| Yearly low, middle | For best performance, avoid diamonds with breakouts near the yearly high. | |
| Volume trend | A falling volume trend for upward breakouts results in the best post breakout performance. | |
| Throwbacks and pullbacks | Throwbacks and pullbacks hurt post breakout performance. |
The above figure shows an example of a diamond bottom chart pattern. Many times the diamond chart pattern is skewed or pushed to one side, making diamonds difficult to spot. In this example, outliers A and B hide the diamond shape.
Notice that price at D tries to climb back to the launch point C but does not quite make it. That is typical behavior so plan accordingly when you trade. This diamond bottom also shows a U-shaped volume pattern.
-- Thomas Bulkowski
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