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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 Eve & Adam Double Bottom

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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 09/20/2017
22,413 41.79 0.2%
9,654 147.29 1.5%
732 -5.08 -0.7%
6,456 -5.28 -0.1%
2,508 1.59 0.1%
YTD
13.4%
6.8%
10.9%
19.9%
12.0%
Tom's Targets    Overview: 09/14/2017
22,450 or 21,500 by 10/01/2017
9,750 or 9,200 by 10/01/2017
775 or 730 by 10/01/2017
6,650 or 6,200 by 10/01/2017
2,600 or 2,425 by 10/01/2017

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.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 244 to 258.

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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.

 

Eve & Adam double bottom chart pattern

Eve & Adam Double Bottom
Score your chart pattern for performance.

Important Bull Market Results for Eve & Adam Double Bottoms

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%

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

Eve & Adam Double Bottom Identification Guidelines

Consult the associated figure on the right.

CharacteristicDiscussion
Price trendDownward leading to the pattern.
ShapeTwo 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.
PeakThe rise between bottoms should measure at least 10%, but allow variations.
Bottom priceThe price variation between bottoms is small, usually between 0% and 4%. The two valleys should appear to bottom near the same price.
SeparationThe twin valleys are several weeks apart with most falling in the 2 to 7 week range; wider than 7 weeks and performance deteriorates.
ConfirmationThe 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.
VolumeEvenly split between the right and left bottom showing heavier volume.

Double bottom setup

The Double Bottom Setup

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Eve & Adam Double Bottom Trading Tips

A trading setup related to double bottoms and throwbacks is located here.

Consult the associated figures on the right.

Trading TacticExplanation
Measure ruleCompute 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 reversalPrice must have something to reverse, so if the decline leading to the double bottom is small, expect a small rise.
Big WLook 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.
ConfirmationWait 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.
HandleSee 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 baseExpect 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.
TrendsA short-term decline leading to the double bottom results in the best post breakout performance.
Yearly lowDouble bottoms within a third of the yearly low perform best.
Volume trendA downward volume trend suggests good post breakout performance.
ThrowbacksThrowbacks hurt post breakout performance
Eve and Adam double bottom measure rule
The Measure Rule
Eve and Adam double bottom chart pattern with handle
Handle
Flat base followed by any chart pattern
Flat Base
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Eve & Adam Double Bottom Example

Eve & Adam double bottom chart pattern 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.

-- Thomas Bulkowski

 

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Other Eve & Adam Double Bottom Examples

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. If at first you do succeed, try not to look astonished.