Bollinger Bands & Double Bottom Setup For The Dow Jones
Let's have a look at the Dow Jones on the 4-hour chart. I am looking at trading this potential double bottom.
We have the Bollinger bands on and I have highlighted a zone of support/resistance in yellow.
We can call this zone the neckline. This zone has been flipped from support to resistance and back to support many times in the past. Currently, we are sitting above this zone so I would like to see a pull back into the zone before opening up a long position targeting the 32550 price level.
The double bottom is not perfect, but then again, patterns in trading rarely are. The wick-up to the yellow neckline shows me that this is an area that is respected. So, with that in mind, if we can flip that area into support, then it gives way for a possible long entry.
The middle line of the Bollinger bands lines up nicely with the yellow neckline adding confluence to the setup.
Looking at the MACD Histogram, we can see we have some divergence that has shown the bears weakening across the two 'bottom peaks’ of the wonky-looking double bottom.
The MA lines of the MACD have crossed over but are still below the Histogram, indicating bullish price action but the larger trend still being bearish.
This is the 4-hour chart so patience must be respected to trade this time frame.
Let's watch and see what happens when the markets open.
Have a great Monday and a great week ahead.
The Vortex Trader
We have the Bollinger bands on and I have highlighted a zone of support/resistance in yellow.
We can call this zone the neckline. This zone has been flipped from support to resistance and back to support many times in the past. Currently, we are sitting above this zone so I would like to see a pull back into the zone before opening up a long position targeting the 32550 price level.
The double bottom is not perfect, but then again, patterns in trading rarely are. The wick-up to the yellow neckline shows me that this is an area that is respected. So, with that in mind, if we can flip that area into support, then it gives way for a possible long entry.
The middle line of the Bollinger bands lines up nicely with the yellow neckline adding confluence to the setup.
Looking at the MACD Histogram, we can see we have some divergence that has shown the bears weakening across the two 'bottom peaks’ of the wonky-looking double bottom.
The MA lines of the MACD have crossed over but are still below the Histogram, indicating bullish price action but the larger trend still being bearish.
This is the 4-hour chart so patience must be respected to trade this time frame.
Let's watch and see what happens when the markets open.
Have a great Monday and a great week ahead.
The Vortex Trader