EUR/GBP - Double Bottom Reversal Setup | Trendline BreakoutThis EUR/GBP (Euro to British Pound) daily chart presents a textbook double bottom reversal pattern, signaling a potential trend reversal after a prolonged downtrend. Additionally, a trendline breakout further strengthens the bullish outlook.
The market structure suggests that buyers are regaining control, and a breakout above the neckline resistance zone (0.84500 - 0.85000) could trigger a significant upward move. Let's break down this setup in detail.
📊 Technical Breakdown of the Chart
1️⃣ Double Bottom Formation – A Strong Reversal Signal
🔹 The double bottom is a powerful bullish reversal pattern that forms after an extended downtrend, indicating that selling pressure is fading and buyers are stepping in.
🔹 First Bottom: Established in December 2024, where the price reached a key support level (~0.82453) before bouncing back.
🔹 Second Bottom: Formed in March 2025, confirming the validity of the support level and creating a solid demand zone.
🔹 The neckline resistance (0.84500 - 0.85000) is the key level that price must break to confirm the reversal.
2️⃣ Trendline Breakout – Shift in Market Sentiment
🔹 The market has been in a downtrend, as shown by the descending trendline acting as resistance for several months.
🔹 Recently, the price broke above this trendline, indicating that bearish momentum is weakening and a potential trend reversal is underway.
🔹 This breakout adds confluence to the double bottom pattern, reinforcing the bullish bias.
3️⃣ Key Support & Resistance Levels to Watch
📌 Support Zone (Bottom Area) – 0.82453:
✅ This level has been tested twice (December & March), confirming it as a strong demand zone.
✅ Price consistently rebounded from this level, showing buyers’ dominance.
✅ This is the ideal stop-loss level to protect against downside risks.
📌 Resistance Zone (Neckline) – 0.84500 - 0.85000:
✅ A breakout above this neckline resistance is necessary for a bullish continuation.
✅ If price breaks and retests this level as support, it will confirm a high-probability buy setup.
📌 Target Level – 0.87394 (Projected Move)
✅ This is calculated using the measured move technique, where the distance from the bottom to the neckline is projected upwards.
✅ This level coincides with a previous resistance zone, making it a realistic target.
📈 Trading Strategy – How to Trade This Setup
🎯 Entry Plan for Long Position (Buy Setup)
1️⃣ Breakout Entry:
Enter a long position after a confirmed breakout above 0.85000.
Watch for strong bullish candles with volume confirmation.
2️⃣ Retest Entry (Safer Option):
If price breaks above resistance, wait for a pullback and retest of the 0.84500 - 0.85000 level.
If price holds this zone as new support, it strengthens the bullish confirmation.
📉 Stop-Loss Placement (Risk Management)
✅ Place a stop-loss just below the support zone (0.82453) to protect capital.
✅ This level is strong because price has bounced off it twice, confirming buyer strength.
🎯 Profit Target (Take Profit)
✅ The projected target is 0.87394, aligning with previous resistance.
✅ This offers a high reward-to-risk ratio (RRR), making the trade worth taking.
⚠️ Risk Management & Market Outlook
✅ Bullish Bias – Price action suggests uptrend continuation after breaking out of the trendline.
✅ Confirmation is Crucial! – Enter only after a clear breakout and retest.
✅ Watch for Fakeouts – If price fails to hold above the neckline, it could be a false breakout.
✅ Fundamental Factors – Keep an eye on economic data and central bank policies (ECB & BoE) that may impact the GBP & EUR.
📢 Final Thoughts – Why This Trade is High-Probability
🚀 Double Bottom + Trendline Breakout = Strong Bullish Signal
🚀 Neckline Breakout Above 0.85000 = Confirmation of Trend Reversal
🚀 Targeting 0.87394 with a Favorable Risk-Reward Setup
If price successfully breaks and holds above resistance, we could see a strong rally toward 0.87394 in the coming weeks.
📌 Monitor price action carefully and wait for confirmation before entering the trade.
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