Definition: A broadening formation which, after two or three rallies and declines, suddenly reverts into a regular (usually symmetrical) triangle….also could be described as a complex head-and-shoulders with a V-shaped neckline (but with volume more typical of a broadening formation). Fairly conspicuous and easily detected, but uncommon, and especially rare at bottom reversals. Appears mostly at major tops and high-volume tops preceding extensive intermediate reactions. Use caution in making diamonds out of every head-and-shoulders with a slightly bent neckline (tempting to do, since a V-shaped neckline can give an earlier and more profitable breakout signal), unless the second half of the formation has clean-cut converging boundary lines and activity tends to diminish as in a triangle. Confirmation: Same as h&s and triangle. Prediction: Price moves at least as far from breakout point as greatest distance from top (head) to bottom (V in neckline), but keep in mind that a reversal formation must have something to reverse.
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