Diamond Bottom Pattern in Forex – Bullish Reversal Strategy with Uptrend & Downtrend Examples

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⚡ Quick Summary – Diamond Bottom (Bullish Reversal)

The Diamond Bottom is a bullish reversal pattern that often appears after a downtrend. Price first broadens (lower lows & higher highs), then contracts into a diamond-shaped consolidation before a breakout upward. In this guide, you’ll see clear uptrend and downtrend examples and learn a simple trade plan (entry, targets, stop-loss) with confirmation tips.

Diamond Bottom Pattern – With Uptrend & Downtrend Chart Examples

Understand how the Diamond Bottom forms, why it signals a bullish reversal, and how to trade it with confidence. Includes simple uptrend and downtrend charts and a clean diamond illustration.

📈 Uptrend: Higher Highs & Higher Lows

An uptrend is defined by higher highs (HH) and higher lows (HL). Traders buy pullbacks toward rising support.

HH HL HH HL HH HL HH HL HH HL Uptrend: buyers in control, buy pullbacks to support

📉 Downtrend: Lower Highs & Lower Lows

A downtrend forms when price prints lower highs (LH) and lower lows (LL). Traders sell rallies into falling resistance.

LH LL LH LL LH LL LH LL LH LL Downtrend: sellers in control, sell rallies to resistance

💎 Diamond Bottom (Bullish Reversal)

The Diamond Bottom starts with a broadening phase (volatile swings: lower lows & higher highs), then contracts into a tighter range—forming a diamond. A breakout above resistance is the bullish trigger.

Downtrend context Broadening then contracting = Diamond Breakout level Breakout ↑
  • ✅ Entry: After a confirmed close above the diamond’s resistance (or on a successful retest).
  • 🎯 Targets: Project the height of the diamond from the breakout; scale out at prior swing highs.
  • 🛑 Stop-loss: Below the retest low or just under the diamond’s upper boundary.

🔎 Confirmation & Smart Filters

  • Volume: Prefer increasing volume on the breakout.
  • Candles: Strong bullish close (e.g., wide-body candle) above resistance.
  • Indicators: RSI crossing above 50; MACD turning up.
  • HTF Bias: Align with the higher timeframe (H4/D1) trend if possible.

⚠️ Common Mistakes

  • Entering before a confirmed breakout (fake-outs are common inside the diamond).
  • Ignoring nearby resistance above the breakout level.
  • Setting tight stops inside the noise of the consolidation.

💡 Key Takeaways

  • Diamond Bottom = broadening then contracting range → bullish breakout.
  • Wait for a confirmed close above resistance; avoid premature entries.
  • Use volume, candle strength, RSI/MACD to confirm momentum.
  • Targets via diamond height; place stops below retest/structure.

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