2007 pre-crash : Psychology of Diamond Top on #SPX500 #SPY
« The crash site (downtrend end) is often near the price level of the launch site (uptrend start). » T. Bulkowski
Just to notice on the S&P 500 daily scale we've got a rare chart pattern : a diamond top.
In the case of a diamond top, the psychology of this pattern is characterized by the double indecision of symmetrical broadening. In fact, broadening highlights the increased volatility
unable to sustain the upward trend in the long term. The bullish forces diminish and shares change hands to go from majority stockholders in the market to less informed stockholders.
After a period of euphoria and the market enter in a period of uncertainty. This is materialized in significant oscillations of the course. The output of this chart pattern has a high probability (80%) to reverse down the last upward trend.
An example of Diamond Top on SPX500, 2007 pre-crash period :
Just to notice on the S&P 500 daily scale we've got a rare chart pattern : a diamond top.
In the case of a diamond top, the psychology of this pattern is characterized by the double indecision of symmetrical broadening. In fact, broadening highlights the increased volatility
unable to sustain the upward trend in the long term. The bullish forces diminish and shares change hands to go from majority stockholders in the market to less informed stockholders.
After a period of euphoria and the market enter in a period of uncertainty. This is materialized in significant oscillations of the course. The output of this chart pattern has a high probability (80%) to reverse down the last upward trend.
An example of Diamond Top on SPX500, 2007 pre-crash period :
