Diamond Formations
In some reversals located at proximity to resistance or support, the rounding, double, or rectangle formations form a diamond shape. The resulting diamond formation is noticeable by its V-shaped neckline. An example is shown in Figure 5.11, with necklines marked with a broken line. The diamond tends to appear at or near reversals of primary trends, just as these do, both bottom and top diamond formations.
Figure 5.11 Diamond formation (Chart courtesy of StockCharts.com)
The diamond tends to take time to fully develop. The example includes a diamond bottom spanning five months and a diamond top over four months. In between ...
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