Today we will talk about the figure of technical analysis "Diamond"
Diamond is not so common, so the figure is not so popular with traders.
But when the figure appears on the chart, you will get a great opportunity to earn big profits.
Identification
The diamond appears after a strong upward movement, which stops at some point and an expanding triangle begins to form on the chart.
After that, the expansion stops and the reverse process begins – a narrowing of the price, so the second part of the diamond is formed.
The narrowing leads to the formation of a second triangle, from which the price breaks down, creating a strong downtrend.
As you understand, a diamond is a reversal figure.
In addition to the reversal at the peak, the diamond may appear at the bottom, starting a new bullish trend.
The same rules apply for the diamond at the bottom of the trend as for the diamond at the top of the trend.
Trading
After you have found a diamond on the chart, you should wait for the breakout.
The breakout point serves as the entry point.
As soon as the price breaks out of the second part of the diamond, you can open a position.
The stop loss is usually set above the last maximum, outside the triangle.
To calculate the potential profit, you need to measure the height of the diamond - 60-80% of this value will be your goal.
You should understand that this is only the first profit goal, since the price very often goes even further, after the diamond.
Therefore, at this point, you can use a strategy with closing part of the profit.
For conservative traders, there is a second entry point – it will be the price movement for the minimum of a diamond.
Also, for such traders, it is possible to set a stop loss beyond the maximum of the diamond.
Conclusion
The figure is suitable for medium-term traders who hold positions for several days.
It is the medium-term diamond that is potentially able to bring big profits.
In addition, it is worth remembering a couple of rules:
It is not worth trading inside a diamond;
And don't forget to set a stop!
Be careful and don't miss your diamond!
Diamond is not so common, so the figure is not so popular with traders.
But when the figure appears on the chart, you will get a great opportunity to earn big profits.
Identification
The diamond appears after a strong upward movement, which stops at some point and an expanding triangle begins to form on the chart.
After that, the expansion stops and the reverse process begins – a narrowing of the price, so the second part of the diamond is formed.
The narrowing leads to the formation of a second triangle, from which the price breaks down, creating a strong downtrend.
As you understand, a diamond is a reversal figure.
In addition to the reversal at the peak, the diamond may appear at the bottom, starting a new bullish trend.
The same rules apply for the diamond at the bottom of the trend as for the diamond at the top of the trend.
Trading
After you have found a diamond on the chart, you should wait for the breakout.
The breakout point serves as the entry point.
As soon as the price breaks out of the second part of the diamond, you can open a position.
The stop loss is usually set above the last maximum, outside the triangle.
To calculate the potential profit, you need to measure the height of the diamond - 60-80% of this value will be your goal.
You should understand that this is only the first profit goal, since the price very often goes even further, after the diamond.
Therefore, at this point, you can use a strategy with closing part of the profit.
For conservative traders, there is a second entry point – it will be the price movement for the minimum of a diamond.
Also, for such traders, it is possible to set a stop loss beyond the maximum of the diamond.
Conclusion
The figure is suitable for medium-term traders who hold positions for several days.
It is the medium-term diamond that is potentially able to bring big profits.
In addition, it is worth remembering a couple of rules:
It is not worth trading inside a diamond;
And don't forget to set a stop!
Be careful and don't miss your diamond!
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bit.ly/3spSQqC
🔻FREE Telegram channel🔻
t.me/DeGRAMChannel
🔻Contact for Paid SIGNALS🔻
t.me/DeGRAMForex
