Earlier, I had tested Squirt’s Necklace and found that the damage output ramps up to 100% over 10 secs after taking damage. Test results here: Squirt's Necklace Feedback
I would expect your damage taken to also ramp up along with the damage output, but this is not the case.
In fact, the secondary part of the effect is not working at all. After not taking damage for 10 secs, the first hit is the same as when not wearing the amulet, and it does not change at all.
Boring video showing the test:
When you get hit by melee or projectile damage, you do not lose the buff if you have a shield active. However, if you stand in elemental damage, you lose the buff, even if your shield is not broken.
In addition, if you get hit by a knockback, you lose your buff even if your shield is not broken.
What is worse, they stack, so you do 1/4 damage if you get knocked back while standing in elemental, even if you have a shield active, and have taken no damage.
In my tests, the damage output was 40ish with the buff up, then dropped to 20ish when standing in fire, then dropped to 10ish when getting knocked back with fire.
With no shield active, damage is reduced by 50% when taking melee, projectile, elemental damage or getting knocked back. If you get knocked back after taking other damage, you do 75% reduced damage.
With a shield active, you do not lose the buff for melee or projectile damage, but you do 50% reduced damage if you get knocked back or stand in elemental, even if your shield is not broken, and you do 75% reduced damage if you stand in elemental and also get knocked back.