A diamond bottom has to be preceded by a bearish trend. This pattern marks the exhaustion of the selling current and investor indecision. Volatility and oscillations increase in the first half of the pattern (i.e. in the symmetric broadening wedge pattern); then decrease in the second half of the pattern (i.e. in the symmetric triangle).
What is the diamond bottom pattern?
The diamond bottom pattern is not a common formation but is considered a strong bullish reversal pattern amongst technical analysts.
Is a diamond bottom a reversal pattern?
A diamond bottom pattern is very difficult to spot, and often forgotten by traders. - The first half of a diamond bottom is a symmetrical broadening wedge pattern (continuation pattern) while the diamond bottom (the 2 halves together) is a reversal pattern. For your information: A diamond bottom is a reversal chart pattern.
