In my experience, 2 points is sufficient, although the more points it touches, the more valid the line. All the same, most technicians I follow agree this is a good strong diamond pattern.
I WANT to believe, but doubt whether Mr. Market sees the diamond pattern. Re recent commentary on the market's ability to forecast: before 9/11 the market was already in freefall; and the day before the invasion of Kuwait, the world had been aware that something was going to happen. So, neither case seemed so persuasive to me. If TA worked, wouldn't we all be rich?
Hi Tim, I'm a PHD guy with investools and have studied a good amount of the advanced technical analysis and many Pattern formations...triangles, flags, Head and Shoulds, Cup and Handle, wedges, pennants.... But I've never even heard of a Diamond pattern. Could you explain a bit about the theory of Diamond pattern? Many Thanks.
Tim Knight founded Prophet.net, considered by Forbes and Barrons to be the #1 technical analysis site (sold in early 2005 to INVESTools, where he is the SVP of Technology now). Tim has been trading actively since 1987 and focuses mostly on option positions. He is a dyed-in-the-wool technician, leaning heavily on marked-up charts for his analysis. The contents of this blog are NOT to be considered investment advice, and you should know Tim may or may not have positions in the securities mentioned here.
5 comments:
Doesn't it take 3 points to make a trend line? And if so, the top 2 trendlines only have two points.
In my experience, 2 points is sufficient, although the more points it touches, the more valid the line. All the same, most technicians I follow agree this is a good strong diamond pattern.
I WANT to believe, but doubt whether Mr. Market sees the diamond pattern. Re recent commentary on the market's ability to forecast: before 9/11 the market was already in freefall; and the day before the invasion of Kuwait, the world had been aware that something was going to happen. So, neither case seemed so persuasive to me. If TA worked, wouldn't we all be rich?
Jock
Hi Tim,
I'm a PHD guy with investools and have studied a good amount of the advanced technical analysis and many Pattern formations...triangles, flags, Head and Shoulds, Cup and Handle, wedges, pennants....
But I've never even heard of a Diamond pattern. Could you explain a bit about the theory of Diamond pattern?
Many Thanks.
Regarding the definition of a diamond pattern, here's an excellent article on it: http://chart-patterns.netfirms.com/diamond.htm
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