WEBVTT 00:03.110 --> 00:06.660 In this video we take a look at Diamond tops and bottoms. 00:06.830 --> 00:12.510 Now these formations basically and they can. 00:12.560 --> 00:14.110 They don't have to be a perfect diamond. 00:14.120 --> 00:15.850 I just happened to be drawing one. 00:16.090 --> 00:18.960 You know they can look more like this. 00:21.840 --> 00:26.460 What happens is you get a run and this is a top obviously and this might be the bottom. 00:26.490 --> 00:27.780 Diamond bottom. 00:27.780 --> 00:35.910 You get a run higher in the market and then you start to form a couple of it's like a broadening formation. 00:37.330 --> 00:42.530 That we talked about a couple of videos ago but then starts to tighten back up. 00:43.170 --> 00:48.660 And then once you break down what this tells you is that there's been a lot of soul searching in the 00:48.660 --> 00:54.480 market so to speak and suddenly there's bearish pressure bearish pressure that people are willing to 00:54.540 --> 00:56.140 really get involved in. 00:56.140 --> 00:59.570 And everybody in this diamond is trapped. 00:59.610 --> 01:02.600 So the market needs to break down. 01:02.610 --> 01:07.070 They need to cover their positions in a downtrend. 01:07.070 --> 01:14.540 You can see the exact same thing but then an explosive move up and that of course is a diamond bottom. 01:14.570 --> 01:18.140 Now there's no real measuring stick in these. 01:18.140 --> 01:26.650 A lot of people will try to aim for the highs that typically works out but there isn't like a bonafide 01:26.690 --> 01:33.320 measuring stick if you will like you have with some other type of patterns that we'll be going through 01:33.320 --> 01:34.880 in this module. 01:34.910 --> 01:38.500 So let's take a look at what this looks like. 01:38.510 --> 01:51.090 Go ahead and pull up the trend line tool and you can see that we have seen a lot of noise in this area 01:51.150 --> 01:53.850 and I can draw trend lines 01:56.980 --> 02:01.800 like this like so to form the pattern itself. 02:04.960 --> 02:11.320 And you know we're in a nice uptrend and then we start to lose a little bit of confidence and then we 02:11.320 --> 02:12.940 finally break back down. 02:12.940 --> 02:18.430 You can see that we test that the midpoint of the triangle and then break or the diamond and then break 02:18.430 --> 02:20.550 down from there as well. 02:20.560 --> 02:23.140 So the question is you know what would you aim for. 02:23.140 --> 02:29.630 Well this is about a dollars so eight dollars from 70 3. 02:30.380 --> 02:34.640 You know that's got you right around 65 ish. 02:34.720 --> 02:39.550 And that's where you do end up and now you've gapped lower and you're starting to see more resistance 02:39.550 --> 02:47.910 so clearly that is a viable signal now here in Teva Pharmaceuticals. 02:47.910 --> 02:57.240 We have a bottom and it's you know kind of a sloppy in some of these will be you'll see this occasionally 02:59.870 --> 03:15.630 go ahead and extend this out just a little bit more. 03:15.730 --> 03:23.150 And there you go it's a diamond bottom and what's happened is we've sold off and then there's just a 03:23.150 --> 03:24.860 lot of indecision. 03:24.890 --> 03:26.280 And then we broke higher. 03:26.340 --> 03:31.330 Now something that I'll point out here not to make this more complicated and it needs be because you 03:31.330 --> 03:33.430 know we got basically our height. 03:33.920 --> 03:40.790 But another thing and you'll see this a lot as you go along and this makes the these type of signals 03:40.790 --> 03:44.220 even more important notice that 03:51.230 --> 03:57.320 we have higher lows going into the exiting as well you know we we continued the downtrend that shows 03:57.320 --> 04:00.040 that there is still a bit of conviction. 04:00.050 --> 04:05.330 But the next time we make this higher low then all of a sudden you've got people kind of wondering whether 04:05.330 --> 04:11.790 or not we can hang on and so a lot of that comes to short covering and eventually we break out to the 04:11.790 --> 04:12.550 upside. 04:12.660 --> 04:16.770 Diamond patterns and tops and bottoms are a little bit more difficult to trade than some of the other 04:16.770 --> 04:18.140 patterns. 04:18.150 --> 04:24.000 The main takeaway here is you need to keep in mind that it's a loss of confidence in the overall trend.