Double Bottom May Put an End to GBP/USD Downtrend
January 29, 2017 (Last updated on February 26, 2017) by Andriy Moraru
The double bottom that is currently forming on the daily GBP/USD chart has a potential for stopping the medium-term bearish trend that persists since the Brexit referendum. The formation is not ideal — it lacks symmetry and has a malformed middle part. Yet it may offer a valid trading signal in case of the upside breakout.
The image below shows the double bottom marked with the yellow lines. The lower one marks the two troughs. The upper one marks the neckline and midpoint. The cyan line will be used as an entry level for a bullish breakout. I will set my take-profit to the green line, located at 100% of the pattern’s height above the upper border. I will ignore the downside breakouts of this double bottom formation. You can click on the image to see a full-size chart:
I have built this chart using the ChannelPattern script. You can download my MetaTrader 4 chart template for this GBP/USD pattern. You can trade it using my free Chart Pattern Helper EA.
Update 2017-02-18: I have cancelled the pending order as the chart no longer resembles a proper double bottom pattern.
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