EUR/JPY Weekly Analysis – Major Double Bottom Breakout Setup 🚀
1. 🔍 Overall Market Structure:
The EUR/JPY pair has been consolidating within a broad range after a strong bullish rally that started in 2023. Following the peak, price action corrected and established a significant horizontal support around 155.130. The recent price behavior suggests the market is building a double bottom structure — a classic technical reversal signal hinting at the end of the corrective phase and a potential continuation of the broader bullish trend.
The broader trend remains bullish on the higher timeframes, and the formation of a double bottom within that context greatly enhances the probability of a bullish breakout.
2. 🏛 Pattern Details: Double Bottom Formation
First Bottom (Bottom 1): Price dipped to 155.130 around mid-2024, encountering strong buying interest that prevented further declines.
Second Bottom (Bottom 2): A second decline retested the same level, confirming the strength of the support and forming the second leg of the "W" shape.
Neckline/Resistance: Price faced consistent resistance around 163.000, forming a clear neckline for the pattern. This is the key breakout point traders are watching.
🔵 Key Characteristics:
Both bottoms occurred at roughly the same horizontal level (within an acceptable margin).
The recovery between the two bottoms adds to the pattern’s reliability.
Volume generally contracts during the formation and is expected to expand during breakout.
3. 📈 Important Technical Levels
Level Type Price (JPY) Details
Support 155.130 Key demand zone where buyers strongly reacted.
Neckline/Resistance 163.000 Critical breakout level confirming reversal.
First Target (TP1) 169.858 Based on the height of the pattern projected upwards from the neckline.
Final Target (TP2) 175.590 Extension target based on measured move theory.
Stop Loss (SL) Below 155.130 Safety net in case the breakout fails.
4. 🛠 Trading Plan Setup
Entry: Initiate buys after a weekly candle closes convincingly above 163.000, preferably accompanied by above-average volume.
Conservative Entry: Wait for a breakout and a successful retest of the neckline (price returns to 163.000 and finds support).
Take Profit 1: 169.858 — the projected move from the breakout.
Take Profit 2: 175.590 — allowing a runner if the bullish momentum continues.
Stop Loss: Secure under 155.130, or under the most recent swing low post-breakout if adopting a dynamic stop strategy.
5. 🧠 Market Sentiment & Psychology
This double bottom reflects a shift in market sentiment:
Sellers attempted to push the price lower twice but failed both times.
Buyers stepped in with strength at the second bottom, signaling the end of bearish momentum.
The market now shows accumulation signs, meaning smart money is positioning for a bullish phase.
If the neckline is broken, it could trigger widespread buying interest, fueling a powerful move upward.
6. 📊 Supporting Indicators and Tools
While the chart mainly focuses on price action and structure, additional tools can provide confirmation:
RSI (Relative Strength Index): Watch for bullish divergence or a break above 50 during breakout.
MACD: A bullish crossover or MACD line above the signal line can add confidence.
Volume: A spike in volume during breakout is a classic validation of genuine market interest.
7. ⚡ Risk Management Tips
Use appropriate position sizing based on your stop-loss distance and account risk tolerance (e.g., risking only 1-2% of your account).
Scale out partial profits at TP1 to de-risk the trade.
Use trailing stops once TP1 is hit to lock in further profits safely.
Monitor economic news/events that could impact EUR or JPY volatility (e.g., ECB or BOJ announcements).
✅ Summary:
A clear, well-formed double bottom indicates a high-probability bullish reversal in EUR/JPY.
Critical breakout above 163.000 would validate the pattern.
Targeting upside levels at 169.858 and 175.590 with stop-loss below 155.130 ensures a good risk-reward ratio.
Favoring long setups once confirmation is obtained, while maintaining disciplined risk management.
1. 🔍 Overall Market Structure:
The EUR/JPY pair has been consolidating within a broad range after a strong bullish rally that started in 2023. Following the peak, price action corrected and established a significant horizontal support around 155.130. The recent price behavior suggests the market is building a double bottom structure — a classic technical reversal signal hinting at the end of the corrective phase and a potential continuation of the broader bullish trend.
The broader trend remains bullish on the higher timeframes, and the formation of a double bottom within that context greatly enhances the probability of a bullish breakout.
2. 🏛 Pattern Details: Double Bottom Formation
First Bottom (Bottom 1): Price dipped to 155.130 around mid-2024, encountering strong buying interest that prevented further declines.
Second Bottom (Bottom 2): A second decline retested the same level, confirming the strength of the support and forming the second leg of the "W" shape.
Neckline/Resistance: Price faced consistent resistance around 163.000, forming a clear neckline for the pattern. This is the key breakout point traders are watching.
🔵 Key Characteristics:
Both bottoms occurred at roughly the same horizontal level (within an acceptable margin).
The recovery between the two bottoms adds to the pattern’s reliability.
Volume generally contracts during the formation and is expected to expand during breakout.
3. 📈 Important Technical Levels
Level Type Price (JPY) Details
Support 155.130 Key demand zone where buyers strongly reacted.
Neckline/Resistance 163.000 Critical breakout level confirming reversal.
First Target (TP1) 169.858 Based on the height of the pattern projected upwards from the neckline.
Final Target (TP2) 175.590 Extension target based on measured move theory.
Stop Loss (SL) Below 155.130 Safety net in case the breakout fails.
4. 🛠 Trading Plan Setup
Entry: Initiate buys after a weekly candle closes convincingly above 163.000, preferably accompanied by above-average volume.
Conservative Entry: Wait for a breakout and a successful retest of the neckline (price returns to 163.000 and finds support).
Take Profit 1: 169.858 — the projected move from the breakout.
Take Profit 2: 175.590 — allowing a runner if the bullish momentum continues.
Stop Loss: Secure under 155.130, or under the most recent swing low post-breakout if adopting a dynamic stop strategy.
5. 🧠 Market Sentiment & Psychology
This double bottom reflects a shift in market sentiment:
Sellers attempted to push the price lower twice but failed both times.
Buyers stepped in with strength at the second bottom, signaling the end of bearish momentum.
The market now shows accumulation signs, meaning smart money is positioning for a bullish phase.
If the neckline is broken, it could trigger widespread buying interest, fueling a powerful move upward.
6. 📊 Supporting Indicators and Tools
While the chart mainly focuses on price action and structure, additional tools can provide confirmation:
RSI (Relative Strength Index): Watch for bullish divergence or a break above 50 during breakout.
MACD: A bullish crossover or MACD line above the signal line can add confidence.
Volume: A spike in volume during breakout is a classic validation of genuine market interest.
7. ⚡ Risk Management Tips
Use appropriate position sizing based on your stop-loss distance and account risk tolerance (e.g., risking only 1-2% of your account).
Scale out partial profits at TP1 to de-risk the trade.
Use trailing stops once TP1 is hit to lock in further profits safely.
Monitor economic news/events that could impact EUR or JPY volatility (e.g., ECB or BOJ announcements).
✅ Summary:
A clear, well-formed double bottom indicates a high-probability bullish reversal in EUR/JPY.
Critical breakout above 163.000 would validate the pattern.
Targeting upside levels at 169.858 and 175.590 with stop-loss below 155.130 ensures a good risk-reward ratio.
Favoring long setups once confirmation is obtained, while maintaining disciplined risk management.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.