As of 11/01/2024
  Indus: 42,052 +288.73 +0.7%  
  Trans: 16,351 +99.18 +0.6%  
  Utils: 1,019 -17.89 -1.7%  
  Nasdaq: 18,240 +144.77 +0.8%  
  S&P 500: 5,729 +23.35 +0.4%  
YTD
 +11.6%  
 +2.8%  
 +15.6%  
 +21.5%  
 +20.1%  
  Targets    Overview: 10/31/2024  
  Up arrow43,100 or 41,250 by 11/15/2024
  Up arrow16,800 or 15,700 by 11/15/2024
  Up arrow1,075 or 1,000 by 11/15/2024
  Up arrow19,000 or 17,600 by 11/15/2024
  Up arrow5,900 or 5,600 by 11/15/2024
As of 11/01/2024
  Indus: 42,052 +288.73 +0.7%  
  Trans: 16,351 +99.18 +0.6%  
  Utils: 1,019 -17.89 -1.7%  
  Nasdaq: 18,240 +144.77 +0.8%  
  S&P 500: 5,729 +23.35 +0.4%  
YTD
 +11.6%  
 +2.8%  
 +15.6%  
 +21.5%  
 +20.1%  
  Targets    Overview: 10/31/2024  
  Up arrow43,100 or 41,250 by 11/15/2024
  Up arrow16,800 or 15,700 by 11/15/2024
  Up arrow1,075 or 1,000 by 11/15/2024
  Up arrow19,000 or 17,600 by 11/15/2024
  Up arrow5,900 or 5,600 by 11/15/2024

Bulkowski on Eve & Adam Double Bottoms

Encyclopedia of Chart Pattenrs, 3rd edition

My book, Encyclopedia of Chart Patterns, 3rd Edition, pictured on the right, covers double bottom chart patterns extensively. Some of the information I share with you here.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

$ $ $

Added trading lessons and article updated on 4/17/24.

Important Results
Identification Guidelines
Trading Tips
Example
Trading Lessons
See Also

 

Eve & Adam double bottom chart pattern

Eve & Adam Double Bottom

 Score your chart pattern for performance. 

Eve & Adam Double Bottoms: Important Bull Market Results

Overall performance rank (1 is best): 20 out of 39
Break even failure rate: 12%
Average rise: 42%
Throwback rate: 67%
Percentage meeting price target: 72%

The above numbers are based on 759 perfect trades. See the glossary for definitions.

Eve & Adam Double Bottoms: Identification Guidelines

Consult the associated figure on the right.

CharacteristicDiscussion Double bottom setup
The Double Bottom Setup
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 (the median is 23 days).
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.
VolumeHigher on the left bottom .
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Eve & Adam Double Bottoms: Trading Tips

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

Consult the associated figures on the right.

Trading TacticExplanation
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
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 48% 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 long-term decline (more than 6 months) leading to the double bottom results in the best post breakout performance, but it's only one percentage point above the gain posted by short-term declines (0 to 3 months).
Yearly middleDouble bottoms in the middle third of the yearly price range perform best.
Volume trendA downward volume trend suggests good post breakout performance.
ThrowbacksThrowbacks hurt post breakout performance
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Eve & Adam Double Bottoms: Example

Eve & Adam double bottom chart pattern example

The figure to the right 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.

Double Bottom: Trading Lessons

I present the information in slider format, so be sure to click the left or right arrows to view another slide.

Lessons Summary

 

1 / 2
Chart of Alaska Air

This chart shows an example of a double bottom forming as part of a retrace in an uptrend. The two thick red lines show the primary trend, which is up (daily scale). From time to time, a stock will pause and retrace a portion of the gain as the stock rises. In this case, the retrace formed a reversal pattern called a double bottom (DB on the chart). (Patternz found this double bottom, but it's probably better called a triple bottom.)

This setup, where the upward breakout from a double bottom rejoins the uptrend can lead to substantial gains (not always, of course). But it's a setup worth looking for.

The next chart shows the opposite example.
2 / 2
Chart of Alaska Air

In this example, price is dropping (shown by the thick red lines). A double bottom acts as a reversal of the downtrend (because price moves UP to A, confirming the double bottom as a valid reversal), but when the stock rejoins the current, the reversal collapses and the stock continues lower (to B).

This is a setup that you'll want to avoid.

The end.

-- Thomas Bulkowski

 

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See Also

 

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