M4 · Part 3 — Advanced & rare · Lesson 61/144
5 min 40 XP
A diamond is two halves: first a broadening phase (swings widening), then a contracting phase (swings narrowing back to a point). Connect the highs and lows and the outline is a diamond shape. It usually forms at a top (diamond top) or a bottom (diamond bottom) and signals a reversal.
Why it is more tradeable than a pure megaphone
The contracting second half gives you what the broadening pattern lacks: a clear apex, a clean breakout level, and a measured move. Enter on the break of the diamond (or the retest), stop just back inside, and target the height of the diamond at its widest part, projected from the break.