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The Eve & Eve double top is the best performing of the Adam and Eve combinations of double
tops. It has a large break even failure rate but a decent decline and large rise after the trend ends. If you can tell
when price has bottomed, then that's the time go buy. The Eve & Eve double top is what most chartists call the
classic double top. For more information see pages 321 to 334 of the book
Encyclopedia of Chart Patterns, Second Edition and the following...
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Score your chart pattern for
performance by clicking
here |
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Important Bull Market Results
Overall performance rank (1 is best): 2 out of 21
Break even failure rate: 11%
Average decline: 18%
Pullback rate: 59%
Percentage meeting price target: 73%
Identification Guidelines
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Characteristic |
Discussion |
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Price trend |
Upward leading to the pattern |
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Shape |
Two distinct tops that look
similar. An Eve top is rounded and wide looking, but sometimes has several short spikes poking out. |
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Valley |
The valley drop between the
tops should measure at least 10%, but allow exceptions. The figure to the right
shows this for a typical double top chart pattern. |
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Top price |
The variation between price
peaks is small, less than 3%. The two tops should appear to peak near the same
price. The figure to the right shows this for a typical double top.
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Separation |
The twin peaks are several
weeks apart with most falling in the 2 to 6 week range. The figure to the right
shows this for a typical double top. |
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Confirmation |
The double top confirms as
a true double top once price closes below the valley between the two peaks. The
lowest red line on the figure to the right shows this.
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Volume |
Usually higher on formation
of the left peak. |
Trading Tips
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Trading Tactic |
Explanation |
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Measure rule |
Compute the height from the highest peak (point B on
the chart to the right) to the lowest valley (A) in the pattern then multiply it by
the above “percentage meeting price target.”
Subtract the result from the breakout price (A) to get the target (C).
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Price reversal |
Price must have something
to reverse, so if the rise leading to the double top is small, expect a small decline. |
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Confirmation |
Wait 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. |
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Trend end |
If a double top appears after a
long-term decline (that is, an upward retrace in a falling price trend),
confirmation of the top may mean that the end of the decline is
near (10% to 20% below and a month away). |
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Trends |
A short-term rise leading to the
double top results in the best postbreakout performance. |
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Yearly high |
Double tops within a third of the
yearly high perform best. |
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Volume trend |
The volume trend has no influence
on postbreakout performance. |
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Pullbacks |
Pullbacks hurt postbreakout performance. |
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 Measure Rule
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Example
The above figure shows an example of an Eve & Eve double top chart pattern. Both Eve tops appear rounded, wide,
not narrow and pointed like their Adam counterparts. The Eve & Eve double top confirms as a true double top when
price closes below the confirmation line, shown in the above chart as a blue horizontal line. A pullback brings the
stock back to the breakout price before the decline resumes.
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