What Is The Adam And Eve Bottom Chart Pattern?
An Adam and Eve Bottom is a double bottom formation consisting of a sharp, V-shaped bottom to create “Adam”, and a second rounded bottom creating the “Eve.”
Like other double bottoms, the pattern is confirmed with a break of neckline resistance.
How To Identify The Adam And Eve Bottom Pattern?
Like the double bottom, price action must meet a support trendline two times to form consecutive troughs roughly equal in size.
However, the troughs can take different times to form.
The bottom of the Adam trough forms quickly between 1 to 2 candles, while the bottom of the Eve trough takes multiple candles to form.
What Is The Psychology Behind The Adam And Eve Bottom Pattern?
The Adam and Eve Bottom bottom pattern is a bullish chart pattern that can provide traders with valuable insights into the market’s psychology.
It’s characterized by two bottoms of approximately the same depth, with the second bottom slightly more rounded than the first (the “Adam” and “Eve” bottoms, respectively).
The pattern typically takes several weeks or months to form and is a sign of a potential trend reversal.
Traders interpret the pattern as a sign of a transition from a bearish market sentiment to a bullish market sentiment.
The pattern represents a period of indecision in the market, where buyers and sellers are evenly matched, but ultimately buyers gain momentum and push the price higher.
The psychology behind the Adam and Eve bottom pattern is that the two bottoms represent two periods of strong selling pressure, where sellers are in control and pushing the price lower.
However, buyers eventually step in and push the price higher towards the first peak, forming the “Adam” bottom.
The first peak represents a period of indecision in the market, where buyers and sellers are unsure of the direction of the trend.
As the pattern continues to form, the price moves lower again towards the second bottom, forming the “Eve” bottom.
The Eve bottom is rounded and wider than the Adam bottom, indicating that buyers have gained momentum and are pushing the price higher.
Once the price breaks above the peak between the two bottoms, it’s a signal that the trend has reversed, and traders may enter long positions.
How To Trade The Adam And Eve Bottom Pattern?
To trade the Adam and Eve Bottom bottom pattern, traders typically wait for the price to break above the peak between the two bottoms with a strong volume surge.
The breakout should ideally occur on higher than average trading volume, as this confirms that there is significant buying pressure behind the move.
Traders may enter a long position once the price breaks above the peak, with a stop loss placed below the lowest low between the two bottoms.
The profit target can be set based on the height of the pattern, with the expectation that the price will move at least the same distance as the pattern’s height in the direction of the breakout.
Alternatively, traders may wait for a pullback to the peak before entering a long position. This approach can provide a better risk-to-reward ratio, as the entry price is closer to the peak, and the stop loss can be placed tighter.
However, it may also result in missing out on some of the initial gains from the breakout. Ultimately, the best approach will depend on the trader’s risk tolerance, trading style, and market conditions.
It’s worth noting that the Adam and Eve bottom pattern can also result in a false breakout, where the price briefly breaks above the peak before reversing course.
Adam And Eve Bottom Performance Expectations Explained
A bullish pattern is usually expected to emerge as soon as the resistance is breached.
To find potential targets, measure from the resistance to the lowest low of the troughs.
Project the measurement multiplied by 69% to the resistance.