Diamond Top Trading Tips
Trading Tactic Explanation
Price trend If price makes a quick, nearly vertical rise (A) leading to the diamond and the breakout is downward, expect price to drop back to the price at which it started (B) the rise. Also, price must have something to reverse. Diamonds with short-term (less than three months) price trends leading to the diamond perform best post breakout.
Price velocity High velocity moves after the pattern often follow high velocity moves leading to the pattern.
trend A rising trend results in the best post breakout performance.
Throwbacks and pullbacks Throwbacks and pullbacks hurt post breakout performance.
Other Diamond example
With this Diamond, if the pattern does expand and contract elongating the Diamond, I would suspect a throwback would occur.
I also used the cloning technique from nmike https://www.tradingview.com/u/nmike/. The bottom of the diamond pattern (B), matched up with the breakaway gap (Ref) near the 52 low. I suspect these clones to be measured future .
If you scroll back in the chart you will notice a pattern and even further back from the $8 is a flag and .
You might also want to take note of open interest on the calendar spreads. Compared to companies relative small size and limitedness of acess to the palladium-platinum market, this stock has a big draw for option traders.
North American Palladium (ticker: PAL) is a precious metals mining company, operating in Canada. It has been operating its flagship mine Lac Iles (LDI) in Ontario, Canada since 1993. LDI is one of only two primary producers in the world, as palladium usually comes as a by-product of other metals ( platinum or nickel). PAL also operates the Vezza Gold mine, which is located in the Abitibi region of Quebec.
The company is currently undergoing a major expansion to increase production and reduce cash costs per ounce. The goal is to reach annual production of 250.000 ounces of Palladium in Q3 2015 at a cash cost in the low $200s. Palladium is currently trading around $740/oz, and the outlook remains positive for 2013.