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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Adam & Eve Double Tops

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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

Adam & Eve Double Tops Overview

During research for my book, Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book. (pictured on the right), I uncovered many facts about double tops. I discovered that they fail 65% of the time, but that rate is deceiving. If you look at any twin peak pattern, price will fail to close below the valley formed between those two peaks 65% of the time. Price rises instead of drops.

Adam is a term that describes how the top looks, in this case, Adam sports a narrow, pointed top, perhaps with a one-day upward spike. The following Eve top is more rounded looking and wider. If Eve has spikes, they tend to be more numerous and shorter. Many times the difference between Adam and Eve is the width of each over their entire height. Adam tops tend to remain narrow but Eve tops widen over their height. When trying to decide which is which, ask yourself if the two tops appear different or similar. With Adam & Eve, the two should look different (the first narrow and the second wide).

The Adam & Eve double top is a poor performer in both bull and bear markets. Since the rebound after price bottoms is large, it might pay to wait for that scenario instead of shorting the downward breakout. For more information see pages 291 to 306 of the book Encyclopedia of Chart Patterns, Second Edition, and read the following...

Important Bull Market Results for Adam & Eve Double Tops

Overall performance rank (1 is best): 15 out of 21
Break even failure rate: 14%
Average decline: 18%
Pullback rate: 59%
Percentage meeting price target: 69%

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

An Adam & Eve double top chart pattern appears
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Adam & Eve Double Tops Identification Guidelines

CharacteristicDiscussion
Price trendUpward leading to the pattern.
ShapeTwo distinct tops that look different. Adam tops appear first and are narrow, inverted V’s but Eve follows Adam and is more rounded looking and wider than Adam.
ValleyThe valley drop between the tops should measure at least 10%, but allow exceptions.
Top priceThe variation between price peaks is small, less than 3%. The two tops should appear to peak near the same price.
SeparationThe twin peaks are several weeks apart with most falling in 2 to 7 week range.
ConfirmationThe double top confirms as a true double top once price closes below the valley between the two peaks.
VolumeUsually higher on formation of the left peak than the right.
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Adam & Eve Double Tops Trading Tips

Trading TacticExplanationAdam & Eve double top measure rule
The Measure Rule
Measure ruleCompute the height from the highest peak (point B in the figure to the right) to the lowest valley (A) between the two peaks and then multiply it by the above “percentage meeting price target.” Subtract the result from the breakout price (A) to get the target (C). Also, see the double top study. for a new price prediction method.
StopPlace a stop above the Eve peak. The wide and rounded top makes for a good resistance area. The link to the left discusses stop placement.
Price reversalPrice must have something to reverse, so if the rise leading to the double top is small, expect a small decline.
ConfirmationWait for confirmation – price to close below the valley floor. If you don’t wait, there’s a 65% chance that price will continue higher without confirming the double top.
Trend endIf a double top appears after a long-term DECLINE, confirmation of the top may mean that the end of the decline is near (10% to 20% below and a month away).
TrendsA short-term rise leading to the double top results in the best post breakout performance.
Yearly highFor best performance, double tops with breakouts in the middle third of the yearly price range perform best, but the performance difference with the other ranges is small.
PullbacksPullbacks hurt post breakout performance. The link to the left defines a pullback while this link discusses performance.

Adam & Eve double top chart pattern example

Adam & Eve Double Tops Example

The above figure shows an example of an Adam & Eve double top chart pattern. The Adam peak in this example is a one day price spike whereas the Eve peak is wider and flatter. The price squiggles confirm as a true Adam & Eve double top when price closes below the confirmation price, shown here as a blue line.

 

 

Other Adam & Eve Double Top Examples

-- Thomas Bulkowski

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See Also

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. No need to yell. I still won’t listen.