Reversal patterns
Diamond top
Usually bearish
A broadening formation that narrows into a symmetrical triangle, producing a diamond outline at a market top.
What a diamond top tells you
It captures a period of expanding volatility followed by compression — indecision after a climax. It is uncommon and often mislabelled.
Why it forms
A blow-off move creates wide swings; as participants disagree and then tire, the range contracts before resolving.
How traders enter it
Entry on the break of the lower boundary, objective roughly the widest part of the diamond.
How it fails
Very easy to draw onto noise. Without an obvious preceding climax, treat a diamond label with suspicion.
That last section is the one worth rereading. A pattern is only useful because it comes with a level that proves you wrong — without one you have a shape and a hope.
People also ask
Is a diamond top bullish or bearish?
A diamond top is usually read as bearish, but only once it confirms. Before the confirming break it is a shape, and shapes fail. Context decides more than the label does.
How do you trade a diamond top?
Entry on the break of the lower boundary, objective roughly the widest part of the diamond.
When does a diamond top fail?
Very easy to draw onto noise. Without an obvious preceding climax, treat a diamond label with suspicion.
Can ChartLens spot a diamond top for me?
Yes. Photograph or screenshot any chart and ChartLens names the pattern if it is clearly formed, with a confidence level and whether it is forming, confirmed or failed — and says nothing if it is not there.
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