Diamond Bottom Chart PatternDiamond Bottom is a bullish signal indicates that the stock price may rise. For a layman we will try to explain the same with the chart below and it will show you that price appears to have bottomed out and thus reversal appears in near future.
This Diamond bottom pattern shows that the chart is showing signs of reversal as it has broken upward after a period of uncertainty or consolidation.
When Diamond Bottom Pattern is formed?
- The Diamond Bottom pattern begins during a downtrend as 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.
- When the price breaks upward out of the diamonds boundary lines, it marks a significant reversal to a new uptrend.