BTCUSD Bearish Diamond Pattern: is it a start of bearish market?
Updated
What is a Diamond pattern?
A diamond pattern is used for detecting reversals: there are two types of diamonds:
Once rightly identified, it is one of the most profitable patterns for using reversals for trading strategy. Diamond chart formation is a rare chart pattern that looks similar to a head and shoulders pattern with a V-shaped neckline. Diamond chart patterns usually happen at market tops. This pattern occurs when a strong up trending price shows a flattening sideways movement over a prolonged period of time that forms a diamond shape. Detecting reversals is one of the most profitable trading opportunities for technical traders. A successful trader combines these techniques with other technical indicators and other forms of technical analysis to maximize their odds of success.
Does it mean we bearish market starts soon?
Diamonds shows high probability of reversal only at long-term timeframes such as 1D and higher. Currently we detected the Diamond patter on 1H timeframe chart which has a small trend continuation probability.
If you take a look at 1D timeframe chart there is an imperfect Diamond pattern formed on uptrend price action.
Due to imperfections of the formation the probability of starting global bearish price action is low. However a downward cross of Stochastic Oscillator lines combined with Diamond chart pattern formation on 1D and 1H signals that correction is coming. Bitcoin can retrace to $47 865 level
DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.
A diamond pattern is used for detecting reversals: there are two types of diamonds:
- Bullish diamond - can be found on downtrends and shows a possible reversal upward
- Bearish diamond - can be found on uptrends and usually signals for an upcoming major correction
Once rightly identified, it is one of the most profitable patterns for using reversals for trading strategy. Diamond chart formation is a rare chart pattern that looks similar to a head and shoulders pattern with a V-shaped neckline. Diamond chart patterns usually happen at market tops. This pattern occurs when a strong up trending price shows a flattening sideways movement over a prolonged period of time that forms a diamond shape. Detecting reversals is one of the most profitable trading opportunities for technical traders. A successful trader combines these techniques with other technical indicators and other forms of technical analysis to maximize their odds of success.
Does it mean we bearish market starts soon?
Diamonds shows high probability of reversal only at long-term timeframes such as 1D and higher. Currently we detected the Diamond patter on 1H timeframe chart which has a small trend continuation probability.
If you take a look at 1D timeframe chart there is an imperfect Diamond pattern formed on uptrend price action.
Due to imperfections of the formation the probability of starting global bearish price action is low. However a downward cross of Stochastic Oscillator lines combined with Diamond chart pattern formation on 1D and 1H signals that correction is coming. Bitcoin can retrace to $47 865 level
DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.
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Bearish diamond pattern was spotted on 1H and 1D timeframes yesterday. It is a quiet controversial case because Diamond pattern is formed on the uptrend at both timeframes while at 1H chart it is a sign of continuation while at 1D it is a signal of trend reversal.Nevertheless we can see confirmation of both bullish and bearish scenarios.
- A downward cross of Stochastic Oscillator lines combined at 1D timeframe suggest we should have bearish case
- Fractal falling wedge breakout suggest continuation of the down trend
What scenario will happen?
It is a decisive moment at the chart right now. Bitcoin's price action tests edge of the Diamond formation which is drawn as cyan line. This level is also a global resistance of uptrend continuation based on the Major Falling Wedge pattern.
- In case price action manages to breakthrough the resistance and consolidates on the cyan support range we should have bullish scenario with target $62 185
- In case price action rejects from the level we should have confirmation of Diamond structure and decrease to $47 865 zone
Stay tuned to receive new updates and keep in mind that Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.
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Bitcoin's price action accurately follows our initial technical analysis. Based on it the asset should have touched the resistance line and retrace back which happened few hours ago.Currently Bitcoin has broken the Diamond's pattern resistance and touched upper edge of the formation. The price should remain above the wedge resistance, currently it is zone above $57 700. Further it should retrace as it drawn at the chart. In case it happens we can conclude Bearish Diamond pattern is rejected.
Based on current price action probability of bullish scenario has grown significantly and now it is the main scenario according to which we will update all our positions
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DIAMOND IS REJECTEDBitcoin's price action accurately follows the scenario from the latest update. Price broke the Wedge uptrend resistance and now it should act like support and attraction level.
The price still can reach $60 400 level however it should retrace until May 12th to safe entry area which is located between $56 580 and $57 400 levels. When retest happens Bitcoin should start Fractal pattern movement with approximate target $64 700. The local support will hold at $61 680 level where price action can retrace in case of rejection from target level. Be careful to exit positions few days before the next options contracts expire
Stay tuned to receive new updates and keep in mind that Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.
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Bitcoin price action has reached our target buy zone Trade closed: target reached
Initial analysis was correct and Bitcoin's price action finished correction according to bearish Diamond pattern. Bitcoin speculation should be finished now the price retraced and consolidated according to Diamond pattern. Our delayed orders have triggered and we aim to earn profit in the short and middle term.
When diamond is finished there is a high probability of starting a new uptrend growth wave. Be patient and hold your positions. Only strong hands will survive
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