Double Bottom in Dow and GBPJPY ?
Last week we saw the Dow get close to making a double bottom at 7773, the low that was reached in early October. And, during the same time period, GBPJPY did make a double bottom at 139.00. This is pretty significant. Just as this stock index and this currency hit those levels, the market sentiment quickly changed and reversed for several hundred points up. Now, all traders and all the “experts” out there are looking and waiting and hoping for some sort of bottom to be forming on the Dow to shed some light as to when real money will start moving back into the US start market. As I have mentioned before, I have been selling the yens, but I too am very cautious: my brain keeps screaming, “this thing must retrace at some point!!?” I love double bottoms in the forex market, they are very important and helpful for setting up trades on all time frames. So this double bottom on GBPJPY is the area to break for further downside to continue. Today I actually bought this pair for about 80 pips profit. Another part of the story to this currency pair is watching GBPUSD. GBP has been extremely weak. I did notice that the monthly S2 pivot is sitting exactly on the 2000 low at 1.3800, just something to note for possible targets this month. If that actually happens then GBPJPY will most definitely break this double bottom, so it will be important and interesting to see if these levels can hold support or slice through again. My brain says GBPJPY may need to retrace up to the daily 50ema, but that is way up at 168.00, that is 2300 pips away… Sometimes I must put my brain on a shelf and just keep following the trend. Let’s see where this week ends.