Forex Blog

First-hand Forex trading experience and information about foreign exchange market that will be useful to traders

Archives

Rough Diamond Top on Daily Chart of EUR/CAD

March 29, 2020 (Last updated on May 2, 2020) by

The EUR/CAD currency pair had rallied rather strongly on the global COVID-19 news and the demise of crude oil prices. The pair began its uptrend back on February 20, peaking on March 19, and completing the consolidation phase of the diamond top formation this week. The last time I had traded a diamond top pattern was exactly 7 years ago and it didn’t go very well. Diamond top is a rather rare occurrence in Forex (at least in the upper timeframes), but it offers an interesting trading opportunity both to the downside and to the upside. In case of a bearish breakout, it opens the way down to where the initial rally had started. In case of a bullish breakout, a half of that distance might get covered by the price.

The chart below shows the diamond top encompassed by the yellow lines. The cyan lines are where my buy and sell pending entry orders will be placed — at the top (1.59908) and the bottom (1.52135) of the diamond respectively. I will place my short position’s take-profit at where the lower green line is (1.45050). The top green line (1.63451) is where my long position’s take-profit is going to be. In both cases I will set my stop-loss to the formation’s middle line (1.56000), which is marked by the red line on the chart. Please click on the screenshot to see the full-size version of the chart:

EUR/CAD - Diamond Top Pattern on Daily Chart as of 2020-03-29

You can download my MetaTrader 4 chart template for this EUR/CAD pattern.

Update 2020-05-02: I forgot to update this post, but the short trade had triggered on April 6 at 1.52135 with stop-loss at 1.56000 and take-profit at 1.45050. The trade doesn’t look very good now after two days of rally in EUR/CAD. Luckily, it accrued at list some positive swap during the period.

EUR/CAD - Diamond Top Pattern on Daily Chart as of 2020-05-02 - Post-Entry Screenshot

If you have any questions or comments regarding this diamond top on the EUR/CAD chart, please feel free to submit them via the form below.

Leave a Reply

required
required (will not be published)