Diamond Bottom Chart Pattern — How to Spot and Trade It

Broadening then narrowing swings at a low — a diamond base before an upward reversal.

In plain words

Panic that slowly organises itself into calm — then optimism takes over.

What the classic books say

The Diamond Bottom is a reversal pattern with reference reliability Medium and illustrative behaviour of ~70% resolve upward (the kind of statistics catalogued in Bulkowski's encyclopedic pattern studies and Murphy's technical-analysis classic). Rare; strongest after a prolonged downtrend.

Level by level

Beginner

Wild swings shrink into quiet, then price pops upward.

Intermediate

Volatility expansion then contraction at a low signals seller exhaustion.

Advanced

Project the diamond's height from the upside breakout; volume should expand on the break.

Trade plan (educational template)

• Entry: On a confirmed close above the upper diamond boundary.
• Stop-loss: Below the right side of the diamond.
• Target: Diamond height projected up from the breakout.
• Check the numbers with the Risk-Reward calculator before any entry.

Common beginner mistakes

• Giving up before the breakout arrives

Practise it now

• ▶ Draw the Diamond Bottom with live trendlines and a ghost forecast
• 📖 Full lesson in the Learning Hub

_Educational content only — not financial advice. Historical behaviour never guarantees future results._