Mirandole
Short

2007 pre-crash : Psychology of Diamond Top on #SPX500 #SPY

FX:SPX500   S&P 500 index of US listed shares
« The crash site (downtrend end) is often near the price level of the launch site (uptrend start). » T. Bulkowski

Just to notice on the S&P 500             daily scale we've got a rare chart pattern : a diamond top.

In the case of a diamond top, the psychology of this pattern is characterized by the double indecision of symmetrical broadening. In fact, broadening highlights the increased volatility
unable to sustain the upward trend in the long term. The bullish forces diminish and shares change hands to go from majority stockholders in the market to less informed stockholders.
After a period of euphoria and the market enter in a period of uncertainty. This is materialized in significant oscillations of the course. The output of this chart pattern has a high probability (80%) to reverse down the last upward trend.

An example of Diamond Top on SPX500             , 2007 pre-crash period :

 
Mirandole
a year ago
An example of Diamond Top on SPX500, 2007 pre-crash period :

snapshot
+2 Reply
FullTimeTrader
a year ago
Nice diamond! how could not see it? congratulations!
Reply
IvanLabrie PRO FullTimeTrader
a year ago
Traditional EW won't let you see it.
It's a neowave diametric completing a terminal impulse.
I think we have a whole lotta *jpy shorts to take from now on.
Reply
FullTimeTrader IvanLabrie
a year ago
I have succesfully traded diamonds before (see below). You are right may be wave counting did not allowed me to see it here. I agree the crisis can give good opportunities
EURCAD-waiting for a diamond to break

NZDCAD-expecting major reversal-diamond pattern on H4
+1 Reply
IvanLabrie PRO FullTimeTrader
a year ago
Yes, I saw your previous diamond trades, good stuff ;)
I think EW has its place, but it's a bit lagging behind at times. (great for catching tops/bottoms in general though).
Patterns have an edge during consolidations, etc.
We will have great success from now on, with a clear trend. :D
Reply
Mirandole FullTimeTrader
a year ago
Thank you FullTimeTrader. By the way, I really enjoy your charts. Please keep on trading :)

Best Regards,
Julien
Reply
el_trader
a year ago
Very educational... tks!
Reply
Mirandole el_trader
a year ago
You're welcome el_trader.
Reply
tst
a year ago
nice work that's some prediction you got right there. amazing click and play with 3 targets hit.
+1 Reply
Mirandole tst
a year ago
Thank you tst !

I work hard to be able to give some more good ideas like this.

Best regards,
Julien
+1 Reply
tst
a year ago
would this fit as a diamond bottom?
snapshot
Reply
Mirandole tst
a year ago
Hi Tst !

Indeed, It looks like to a diamond bottom. Unfortunately you are on a very short timeframe. Diamond Top/Bottom works really better on long timeframe : 4H 1D. Moreover you have to be careful with the USOIL price when you trade a canadian pair. Even if this is a diamond bottom it has only 69% of probability to breakout upward. To enter long you need to wait a breakout of the diamond bottom pattern. There is indecision on GBPCAD. This week, I was bearish on this pair. You should wait a bit before entering long or short. Let's see why I would prefer to wait a bit.

You have a bearish engulfing on 1W chart :

snapshot


It means that the bullish force of the uptrend is getting out of breath. So a lot of long traders may take some profits and the price may go further down. We may start a correction.

In add, on the 1D chart view :

snapshot


You have a Long Upper Shadow candlestick. This is a bearish signal. We are close to break the uptrend support.
If we break 2.09 level support we may go a lot further down.


On 1H view :

snapshot


We have indeed a diamond bottom forming but in accordance with the long term view which is very bearish, I'll be extra-cautious about getting long here. Because we have break the uptrend support. So 2.02840 horizontal support need to hold to bounce up. And I don't think it will hold. This may trap a lot of long traders.

I would advise you to not entering long on this trade. GBPCAD looks really bearish to me. So I won't going long on it even if it may go up a bit before going down again and strongly.


I hope I have helped you. And I am sorry for my english. I know it isn't good. But I try to do my best to practice it.


Best Regards,
Julien
+1 Reply
tst Mirandole
a year ago
Many Thanks Julien. yes being a low time frame it would have less probability. 1 month ago I published an idea on gbpcad "wait for the short". the uptrend reach exhaustion around where I had thought. i was looking for a reversal for short entry when I noticed the diamond so im just wait and see.... My trading plan is two weekly closes below a trend line and this is the first weekly close. ill be watching this week to see if I can get a short trade out of this pair.
Reply
greenplay
a year ago
Very nice chart. Reached all 3 targets in a very short time period. How do you see the next price pattern?
Reply
greenplay greenplay
a year ago

Is the downward correction of SPX500 yet over?
Reply
Mirandole greenplay
a year ago
Hi Greenplay !

Thank you for your comment. Is the downward correction over ? How do I see the next price pattern ? For now I really don't know. I may publish a chart if I do.

Best Regards,
Julien
Reply
greenplay Mirandole
a year ago
Thank You very much Julien. I like your chart study. Will pay close attention in future :)
Reply
JPMorgains
10 months ago
Wow what an epic call…kudos.
Reply
Mirandole JPMorgains
10 months ago
It was a lucky trade indeed.
Thank you Morgains !

Regards
Reply
JPMorgains Mirandole
10 months ago
Hat tip!
Reply
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