💎 Diamond Top Pattern – Bearish Reversal Signal

The Diamond Top is a rare but powerful bearish reversal pattern that forms after an uptrend. It indicates market indecision followed by a potential strong downward breakout.

📘 What Is the Diamond Top Pattern?

The Diamond Top forms when price action first broadens (making higher highs and lower lows) and then contracts (making lower highs and higher lows), creating a diamond-like shape. It often occurs after an uptrend and signals a potential reversal when price breaks below support.

• Occurs after a clear uptrend.
• Price forms a broadening pattern first, then narrows into a diamond shape.
• Volume is higher during the broadening phase and declines during the contraction.
• Breakdown below support confirms a bearish reversal.
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💡 Market Psychology

- Broadening Phase: Market is indecisive; buyers push higher, sellers push lower. - Narrowing Phase: Volatility decreases as the market prepares for a breakout. - Breakdown: Sellers dominate, leading to a strong downward move.

✅ Pro Tip: Watch for volume increase during the breakdown to confirm the bearish move.

⚙️ How to Trade Diamond Top

1. Identify an uptrend followed by the diamond-shaped price formation.
2. Draw support along the bottom of the diamond.
3. Enter a sell (short) position after price closes below support.
4. Place a stop-loss above the highest point of the diamond.
5. Set a target using the height of the diamond projected downward.
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🏁 Conclusion

The Diamond Top pattern is a strong bearish reversal indicator. Recognizing it early and confirming with volume can help traders spot profitable shorting opportunities.

“When the Diamond Top forms — indecision resolves, and the bears take control.”