Is the double bottom formation a prelude to a EUR/USD uptrend?
|Embarking into the second half of 2023, traders have witnessed the EURUSD cascade lower since mid-July, meticulously crafting a downward channel that is acutely demarcated with parallel black lines. This technical formation has encapsulated a clear bearish trend, entrapping the currency pair within a rigid downward trajectory and surfacing opportunities for persistent bearish positions.
Perusing the structure, one cannot help but observe the pair’s pronounced weakness, especially considering the dual tests of the lower boundary of the channel in recent sessions. Each descent towards this critical support has been met with a resilient defiance from buyers, momentarily halting the bearish momentum and teasing a potential respite from the perpetual downfall.
In the context of this bearish backdrop, a glimmer of bullish potential is beginning to surface. EURUSD appears to be crafting a ‘double bottom’ formation, distinctly highlighted by yellow rectangles that symbolize two prominent troughs in the pair’s journey. This technical pattern often heralds a potential reversal, especially when found after a notable downtrend.
Traders find themselves perched on the edge of anticipation, with eyes keenly fixated on a pivotal breakout above the upper black line of the channel down formation and a crucial green horizontal resistance. This line, acting as the neckline of the suggestive double bottom, becomes the make-or-break level for bullish proponents. A convincing daily close above these resistances signals an exhilarating shift into bullish territories, while a rejection, particularly one accompanied by bearish price action or candlestick formations, would reinvigorate the prevailing downtrend.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.