Reversal pattern · bearish bias
Diamond Top pattern
A diamond top forms after an uptrend when price swings widen (like a broadening formation) and then narrow (like a symmetrical triangle). The breakdown from the lower right edge completes the reversal.
How to identify a diamond top
- A prior uptrend.
- Swings first widen into a broadening shape.
- Swings then narrow into a converging shape, completing a diamond outline.
What confirms it
A close below the lower right boundary of the diamond.
What invalidates it
A close above the upper right boundary.
How traders project a target
Project the diamond's widest height downward from the breakdown point.
Common mistakes
- Seeing diamonds in ordinary consolidations; it is a rare pattern.
- Drawing the outline with too few swings.
- Ignoring that it is easy to mislabel as a head and shoulders.
Where it appears
Rare and usually seen at major tops after volatile advances.
Frequently asked questions
Is a diamond top bearish?
Yes, it is a bearish reversal pattern that confirms on a break of its lower right boundary.
Why is the diamond pattern rare?
It needs a specific sequence: widening swings followed by narrowing ones. Most markets do not form that cleanly.
What is a diamond top often mistaken for?
A head and shoulders, because the middle swing often stands out.
Related chart patterns
Educational content only, not financial advice. Chart patterns describe probabilities, not certainties, and every pattern can fail. See our disclaimer.