The Secret “Diamond Bottom” Pattern in Euro/USD: Your Hidden Ticket to Winning Trades

Why This Little-Known Pattern Can Change Your Forex Game
Imagine finding a hidden treasure chest in the middle of a crowded marketplace—only a few savvy traders even know it exists. That’s exactly what the Diamond Bottom pattern is in the world of Forex, particularly when trading the Euro/USD pair. Most traders are too busy chasing head-and-shoulders patterns or obsessing over MACD crossovers, while this rare gem quietly signals massive market reversals.
So, let’s pull back the curtain and explore how this mysterious chart formation can give you a serious edge over the competition. And don’t worry, I won’t make it sound like a dull finance lecture—we’ll mix in some humor, some real-world examples, and, most importantly, actionable insights that’ll make your trades shine like a diamond (pun intended).
The Diamond Bottom Pattern: What It Is and Why You Should Care
Before we dive deep into the how, let’s first tackle the what. The Diamond Bottom is a reversal pattern that typically appears at the end of a downtrend. Unlike the usual symmetrical triangle or wedge, this formation looks like—surprise!—a diamond.
Key Features of the Diamond Bottom Pattern:
- Forms at the end of a downtrend
- Features a broadening formation followed by a narrowing range
- Signals a bullish reversal once price breaks out above the resistance
- Works best on higher timeframes (4H, Daily, Weekly)
Now, you might be wondering: Why haven’t I heard of this before? Simple. Most traders are stuck on overused patterns like flags and pennants. The Diamond Bottom is rarer, but when it does appear, it often leads to explosive upside moves—the kind that leave unprepared traders staring at the charts in disbelief.
How to Spot the Diamond Bottom in Euro/USD
If you’ve ever played a game of “Where’s Waldo?” you already have some of the skills required to find this pattern. It’s a bit tricky at first, but once you train your eyes, you’ll start spotting it before the masses.
Step-by-Step Guide to Identifying a Diamond Bottom:
- Identify a Downtrend – The pattern needs a strong preceding downtrend to set the stage.
- Look for Broadening Price Action – The price starts widening, making higher highs and lower lows.
- Watch for Contraction – The range begins to narrow, forming a diamond-like shape.
- Breakout Confirmation – A bullish breakout from the narrowing structure signals high-probability upside potential.
Pro Tip: Use volume as confirmation. A true breakout is usually accompanied by increasing volume, indicating real buying interest.
Why Most Traders Get This Pattern Wrong (And How to Avoid Their Mistakes)
The Diamond Bottom is not your typical trading setup, which means traders often misinterpret it. Here’s how NOT to fall into the same traps:
❌ Mistake #1: Confusing It with a Head & Shoulders Pattern
- Unlike H&S, the Diamond Bottom does not have a clear central peak. If you mistake the two, you could end up shorting when you should be going long.
❌ Mistake #2: Entering Too Early
- Patience, grasshopper. Just because you think you see the pattern forming doesn’t mean you should jump in. Wait for the confirmed breakout before placing your trade.
❌ Mistake #3: Ignoring Volume
- A breakout with no volume is like a car without gas—it’s not going anywhere. Always check for a surge in volume before committing to a position.
A Real-World Case Study: How a Diamond Bottom Led to a 300-Pip Move in Euro/USD
Let’s rewind to a recent Euro/USD setup that caught traders off guard. In late 2023, the pair had been in a prolonged downtrend, with everyone convinced that further declines were inevitable. However, an eagle-eyed trader spotted a developing Diamond Bottom on the daily timeframe.
???? Here’s what happened next:
- Price began forming a broadening pattern, then started contracting.
- A clear breakout above resistance triggered massive buying interest.
- The pair surged 300 pips within just a few weeks, leaving most traders scrambling to get in late.
This is the kind of hidden opportunity that can completely change your Forex career.
How to Trade the Diamond Bottom Pattern Like a Pro
Alright, so you’ve spotted the pattern. Now, how do you actually trade it?
1. Entry Strategy:
- Wait for a confirmed breakout above resistance.
- Enter on a retest of the breakout level (this improves your risk-reward ratio).
2. Stop-Loss Placement:
- Place your stop below the lowest point of the pattern.
- If price re-enters the diamond formation, the setup is invalid.
3. Profit Target:
- Use the measured move technique: Calculate the height of the diamond and project it upwards.
- Alternatively, target key resistance levels or Fibonacci extensions.
Final Thoughts: The Diamond Bottom – Your Hidden Weapon in Forex
If you’re tired of trading the same old patterns and want something rare, powerful, and underutilized, the Diamond Bottom is your new best friend. This formation has the potential to deliver high-probability setups that most traders completely overlook.
By understanding how to identify, trade, and manage risk on this setup, you can add a highly effective weapon to your trading arsenal.
Want to stay ahead of the crowd? Join the StarseedFX community for daily trade ideas, expert insights, and exclusive Forex education:
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Trade smart, stay sharp, and remember—diamonds aren’t just a girl’s best friend, they’re a trader’s too! ????
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Image Credits: Cover image at the top is AI-generated
PLEASE NOTE: This is not trading advice. It is educational content. Markets are influenced by numerous factors, and their reactions can vary each time.

Anne Durrell & Mo
About the Author
Anne Durrell (aka Anne Abouzeid), a former teacher, has a unique talent for transforming complex Forex concepts into something easy, accessible, and even fun. With a blend of humor and in-depth market insight, Anne makes learning about Forex both enlightening and entertaining. She began her trading journey alongside her husband, Mohamed Abouzeid, and they have now been trading full-time for over 12 years.
Anne loves writing and sharing her expertise. For those new to trading, she provides a variety of free forex courses on StarseedFX. If you enjoy the content and want to support her work, consider joining The StarseedFX Community, where you will get daily market insights and trading alerts.
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