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Written by and copyright © 2005-2010 by Thomas N. Bulkowski. All rights reserved.
For more information on this pattern, read
Encyclopedia of Chart Patterns, Second Edition  ,
pictured on the right, pages 244 to 258. That chapter gives a complete review of the chart pattern, including tour, identification guidelines, focus on failures, performance statistics, trading tactics, and sample trade. Below is just a sliver of the information contained in the book.
Eve & Adam double bottoms do better in a bear market than in a bull market according to the
performance rank. Failure rates are lower in a bull market though.
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Eve & Adam Double Bottom
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Important Bull Market Results
Overall performance rank (1 is best): 11 out of 23
Break even failure rate: 4%
Average rise: 35%
Throwback rate: 57%
Percentage meeting price target: 66%
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Identification Guidelines
Consult the associated figure on the right.
| Characteristic | Discussion |
| Price trend | Downward leading to the pattern. |
| Shape | Two distinct valleys that look different. Eve bottoms appear first and are wider and more rounded looking.
Adam bottoms appear after Eve and are narrow, V-shaped, sometimes with one long price spike. Spikes that appear tend to be more numerous and shorter on Eve bottoms. |
| Peak | The rise between bottoms should measure at least 10%, but allow variations. |
| Bottom price | The price variation between bottoms is small, usually between 0% and 4%. The two valleys should appear to
bottom near the same price. |
| Separation | The twin valleys are several weeks apart with most falling in the 2 to 7 week range; wider than 7 weeks and
performance deteriorates. |
| Confirmation | The double bottom confirms as a true double bottom once price closes above the peak between the two valleys.
That is the top red line on the figure to the right. |
| Volume | Evenly split between the right and left bottom showing heavier volume. |
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The Double Bottom Setup
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Trading Tips
A trading setup related to double bottoms and throwbacks is located here.
Consult the associated figures on the right.
| Trading Tactic | Explanation |
| Measure rule | Compute the height from the
highest peak (A) to the lowest valley (B) in the pattern then multiply it by the
above “percentage meeting price target.”
Add the result to the breakout price (the highest peak in the pattern, A) to get
the target, C. |
| Price reversal | Price must have something
to reverse, so if the decline leading to the double bottom is small, expect a small
rise. |
| Big W | Look for a double bottom with a
tall left side, one with a steep decline and few or no price consolidations along
the way. Expect price to return to near
where the downtrend began. |
| Confirmation | Wait for confirmation – price
to close above the peak between the valleys. If you don’t wait, there’s
a 64% chance that price will continue
lower without confirming the double bottom. |
| Handle | See the figure to the right. Sometimes price will confirm the double bottom then waffle up and down, forming a handle. When price breaks out
of this region, it often moves up in a strong trend. |
| Flat base | Expect a large rise if the double
bottom appears after a long, flat base. Use the weekly scale to find the flat base
– the double bottom will look like
a pothole in a road. |
| Trends | A short-term decline leading to the double bottom results in the best post breakout performance. |
| Yearly low | Double bottoms within a third of
the yearly low
perform best. |
| Volume trend | A downward volume trend suggests good post breakout performance. |
| Throwbacks | Throwbacks hurt post breakout performance |
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 The Measure Rule  Handle  Flat Base |
Example
The above figure shows an example of an Eve & Adam double bottom chart pattern. The Eve bottom has three days
at about the same price level. Adam bottom has a long, single price spike. The two bottoms look different. Eve
is wider than Adam and more rounded looking. The Eve & Adam double bottom chart pattern confirms when price closes
above the high between the two bottoms, shown here as the breakout point.
Other Examples
-- Thomas Bulkowski
Copyright © 2005-2010 by Thomas N. Bulkowski. All rights reserved. If at first you do succeed, try not to look astonished.
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