DJIA Line Chart Diamonds and Half Diamond

The simple line chart is treated as the poor cousin of the more exotic candlesticks charts and is often overlooked. In character, in manner, in style, in all things, the supreme excellence is simplicity. Using the simple line chart the green and red diamonds can be seen clearly. The orange half diamond is also known by many names such as

1. Reverse Symmetrical Triangle

2. Megaphone

3. Broadening Pattern

Depending on how the market moves next week this orange half diamond may developed into a full diamond if high volatility swings become compressed.

Take note that a head and shoulders pattern with a red diamond top head was confirmed when the red bold trendline which is also the neckline support broke down on 20 May 2010. This coming week will be critical because support failure of the bold blue trendline will probably result in a fall towards the green horizontal support which is also near the measured move projection of the head and shoulders formation.

A technical rebound is expected for the orange half diamond but it will probably be halted at the light blue horizontal resistance line. Until a powerful breakout emerges from this orange half diamond pattern more range trading between the light blue and pink horizontal lines will be the norm.