“The iShares MSCI Brazil Index (EWZ) has an interesting and relatively rare technical pattern — a “diamond” top.  This is a bearish reversal pattern, which suggests we will see a downturn in the index. As we can see on the chart, the “diamond” shape is outlined with the yellow lines. The downside potential for the pattern, at a minimum, is to the $56 area, or roughly an additional 6 percent loss from current price at the $59 area. This objective is shown by the light blue line,” Bryan McCormick Reports From Option Monster.

“The pattern became active when price broke below the $60 area, and would become inactive if price moves back above that level. While the downside may not seem that great a risk, there is something potentially more important going on here. The diamond shape in question is also an “island” pattern. Note that there was a gap up and a gap down on either side of the pattern, though the gap down was small,” McCormick Reports.

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