USD/JPY – Potential double bottom

FX:USDJPY   U.S. Dollar / Japanese Yen
First things first… What is a double bottom formation?

Double bottom can be best described as - Reversal is a bullish reversal pattern typically found on bar charts, line charts and candlestick charts.

Note the word – bullish reversal pattern. That in itself means the formation needs to appear at the bottom of the downtrend. A double bottom breakout, let’s say on the daily chart , in the middle of the uptrend or at the top of the uptrend loses its relevance.

This is an often ignored rule and thus often leads to loss making trading decisions. Also note, the breakout needs to be supported by strong volumes, especially in case of stocks or indices. In FX, we can use the money flow index available at http://www.tradingview.com to confirm volume support.

Now that we know what the double bottom formation is, we can proceed to have a look at the potential double bottom on the USD/JPY             daily chart .

Clive Lambert, Director at Futures Techs, pointed out to the potential double bottom formation on the Dollar-Yen daily chart on today’s London open finance show here - https://www.youtube.com/watch?v=P7-ksb3VHGM

Lambert says the pair could be heading higher to 107.50 (July 21 high), which would result in a double bottom formation. Of course, the spot needs to take out host of important resistance levels on the way higher namely 103.55 (June 16 low), 104.00 (July 26 low), 104.50 (falling trend line resistance), 105.55 (May 3 low).
Thx for the wonderful knowledge, college!
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