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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 Tops

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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 01/20/2017
19,827 94.85 0.5%
9,225 60.61 0.7%
658 0.48 0.1%
5,555 15.25 0.3%
2,271 7.62 0.3%
YTD
0.3%
2.0%
-0.2%
3.2%
1.5%
Tom's Targets    Overview: 01/18/2017
19,250 or 20,250 by 02/01/2017
8,800 or 9,500 by 02/01/2017
685 or 630 by 02/01/2017
5,700 or 5,400 by 02/01/2017
2,200 or 2,350 by 02/01/2017
Indus strength: None YTD
Mutt Losers: None YTD
Mutt Winners: None YTD

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 307 to 320.

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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 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 substantially over their height. When trying to decide which is which, ask yourself if the two tops appear different or similar. With Eve & Adam, the two should look different (the first wide and the second narrow).

Eve & Adam double tops do better in a bear market than in a bull market according to the performance rank. Pullbacks happen almost two-thirds of the time, so expect one after a downward breakout, especially if there is nearby underlying support.

Important Bull Market Results for Eve & Adam Double Tops

Overall performance rank (1 is best): 13 out of 21
Break even failure rate: 13%
Average decline: 15%
Pullback rate: 64%
Percentage meeting price target: 72%

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

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

CharacteristicDiscussionDouble top setup
Configuration
Price trendUpward leading to the pattern.
ShapeTwo distinct tops that look different. Eve appears first and is rounded looking and wider than Adam. Adam comes second and is narrow, an inverted V, often appears as a 1-day price spike.
ValleyThe valley drop between the tops should measure at least 10%, but allow exceptions. The figure to the right shows the details.
Top priceThe variation between price peaks is small, less than 3%. The two tops should appear to peak near the same price. Oddly, a large price variation suggests better post breakout performance. The figure to the right shows the details for generic double tops.
SeparationThe twin peaks are several weeks apart with most falling in the 2 to 6 week range. The figure to the right shows the details.
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 right peak. This is the only double top with that configuration.
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Eve & Adam Double Tops Trading Tips

Trading TacticExplanationEve and Adam double top measure rule
The Measure Rule
Measure ruleCompute the height from the highest peak (B in the figure to the right) to the lowest valley (A) in the pattern then multiply by the above “percentage meeting price target.” Subtract the result from the breakout price (A) to get the target (C).
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 (point A in the figure to the right). 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 (meaning the double top appears as part of an upward retrace in a downtrend), confirmation of the top may mean that the end of the decline is near (10% to 20% below and a month away).
TrendsAn intermediate-term rise (3-6 months) leading to the double top results in the best post breakout performance.
Yearly highAvoid double tops in the middle of the yearly price range. They show the worst performance post breakout, but differences are small.
Volume trendA downward volume trend between the peaks shows marginally better performance, post breakout.
PullbacksPullbacks hurt post breakout performance.
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Eve & Adam Double Top Example

Eve & Adam double top chart pattern example

The figure on the right shows an example of an Eve & Adam double top chart pattern. The Eve top has several days at about the same price level. Adam has a long, single price spike. The two tops look different. Eve is wider than Adam and more rounded looking.

The Eve & Adam double top chart pattern confirms when price closes below the valley between the two tops, shown here as point A.

Price at point B attempts a pullback but does not quite make it up to the price level of the breakout (A).

Just by looking at this example, you can see that it fulfills the measure rule. That means the decline after this pattern confirms is well below the height of this pattern projected downward from A.

-- Thomas Bulkowski

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Other Eve & Adam Double Top 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. Diplomacy is the art of letting someone have your way.