Here is another Forex trading snack!
Diamond patterns don’t happen all that often. New traders might be asking what does it mean, and how can we trade it?
Diamond patterns are called reversal patterns usually found at tops or bottoms of trends. The blue trend lines form a 4 sided diamond pattern and price continues to go up and down inside of the pattern first getting larger then compressing ever smaller forming the diamond until the break out occurs.
With XAUUSD this pattern has been building inside of what looks to be a bearish short term wedge point lower. This smaller inside diamond pattern then could point to the blue box around 1500 area as target and resistance level. Because of it’s a short term chart pattern, and that it has been building after a short term decline ( top of this wedge pattern ) it could also bounce to retest the top trend.
Usually diamond pattern targets are determined by taking top price and bottom price ( the top and bottom of the diamond pattern shape ) and projecting that distance from the break.
Using this, the pattern Points to the top side right at top trend line around 1544
And if down targeted price would be 1500
Because this diamond pattern is a 1H chart pattern, built inside of a what looks like a longer chart time wedge, not necessarily at a true top or bottom trend, price could go either way. One could conclude it is at a bottom of a very short trend so targeting the top of the wedge makes sense. Personally shorter term chart patterns are for the most part very short term in ability to trade them, so should mainly be used to trade off the longer projected targets those short term patterns point to and suggest this could be the next targeted move.
Diamond patterns are rare, so for new traders to take note and study them as they occur in the markets could also add another tool into your trading tool box.
In life you either make dust or you eat dust.
All the best traders.
Diamond patterns don’t happen all that often. New traders might be asking what does it mean, and how can we trade it?
Diamond patterns are called reversal patterns usually found at tops or bottoms of trends. The blue trend lines form a 4 sided diamond pattern and price continues to go up and down inside of the pattern first getting larger then compressing ever smaller forming the diamond until the break out occurs.
With XAUUSD this pattern has been building inside of what looks to be a bearish short term wedge point lower. This smaller inside diamond pattern then could point to the blue box around 1500 area as target and resistance level. Because of it’s a short term chart pattern, and that it has been building after a short term decline ( top of this wedge pattern ) it could also bounce to retest the top trend.
Usually diamond pattern targets are determined by taking top price and bottom price ( the top and bottom of the diamond pattern shape ) and projecting that distance from the break.
Using this, the pattern Points to the top side right at top trend line around 1544
And if down targeted price would be 1500
Because this diamond pattern is a 1H chart pattern, built inside of a what looks like a longer chart time wedge, not necessarily at a true top or bottom trend, price could go either way. One could conclude it is at a bottom of a very short trend so targeting the top of the wedge makes sense. Personally shorter term chart patterns are for the most part very short term in ability to trade them, so should mainly be used to trade off the longer projected targets those short term patterns point to and suggest this could be the next targeted move.
Diamond patterns are rare, so for new traders to take note and study them as they occur in the markets could also add another tool into your trading tool box.
In life you either make dust or you eat dust.
All the best traders.
Trade closed: target reached:
Well the 1 hour diamond pattern broke to the top side as suspected. Pocketed 16 on the move. Was slightly more then the pattern size which was 14-15 ish.
Take what the markets will give you.
All the best traders,
Off to the next trade!
Take what the markets will give you.
All the best traders,
Off to the next trade!