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%
|
43,100 or 41,250 by 11/15/2024
16,800 or 15,700 by 11/15/2024
1,075 or 1,000 by 11/15/2024
19,000 or 17,600 by 11/15/2024
5,900 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%
| |
43,100 or 41,250 by 11/15/2024
16,800 or 15,700 by 11/15/2024
1,075 or 1,000 by 11/15/2024
19,000 or 17,600 by 11/15/2024
5,900 or 5,600 by 11/15/2024
| ||
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.
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Added trading lessons and article updated on 4/17/24.
Eve & Adam Double Bottom
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The above numbers are based on 759 perfect trades. See the glossary for definitions.
Consult the associated figure on the right.
Characteristic | Discussion |
The Double Bottom Setup
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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 (the median is 23 days). | |
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 | Higher on the left bottom . |
A trading setup related to double bottoms and throwbacks is located here.
Consult the associated figures on the right.
Trading Tactic | Explanation |
The Measure Rule Handle Flat Base |
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 48% 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 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 middle | Double bottoms in the middle third of the yearly price range perform best. | |
Volume trend | A downward volume trend suggests good post breakout performance. | |
Throwbacks | Throwbacks hurt post breakout performance |
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.
I present the information in slider format, so be sure to click the left or right arrows to view another slide.
-- Thomas Bulkowski
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