EUR/GBP - Double Bottom Reversal Setup | Trendline Breakout

This 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.

🔔 Like & Follow for More Trading Setups! 🚀📈