Trading Diamond Pattern

The example above shows a continuation "Diamond" pattern from the daily Dow Emini futures (YM) chart. In March 2005, after making a "swing high" of 11460 (A), YM corrected and declined to 10500 (B). While correcting, YM paused and formed a "Diamond" pattern from mid March to April 2005.

1. Wait for a clear breakdown from the "Diamond" pattern.

2. Enter a "short" in the direction of the prior trend before the "Diamond" pattern at 10850.

3. Place a "stop" order above the high of the "Diamond" at 11050.

4. Target the range of AB (500 pts) from C to 10500.

Trading Diamond Pattern

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