Diamond Bottom is considered a bullish signal indicating a possible reversal of the current downtrend to a new uptrend. Diamond patterns usually form over several months in very active markets. Volume remains high during the formation of this pattern.
The Diamond Bottom pattern occurs because prices create higher highs and lower lows in a broadening pattern. Then the trading range gradually narrows after the highs peak and the lows start trending upward. The Technical Event occurs when prices break upward out of the diamond formation.
The inbound trend is an important characteristic of the pattern. A shallow inbound trend may indicate a period of consolidation before the price move indicated by the pattern begins. Look for an inbound trend that is longer than the duration of the pattern. A good rule of thumb is that the inbound trend should be at least 2 times the duration of the pattern.
Target: measure the distance between B and C point,if the distance is 73% after breakout from D point the target will be +73% potentially profit
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