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Adam & Eve
Bottoms
www.MarkJessing.com
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| Adam & Eve Reversal | |
Adam and Eve bottoms are good indicators of a reversal in a downtrend. Here is what it looks like:  The first part of this pattern forms when the fear takes the market down quickly, sometimes called a flash crash, and then it recoveres the same day/candle. The low of that candle is the support level where a reversal is expected. Then over the next week or two the market wanders its way back down to the bottom set by the large wick. When it gets to the bottom of the wick, is treats it as a support level and slowly makes its way back up to the top of the Adam candle. Like any candle pattern, they are not always the perfect shape. Here is MRK where is didn't quite go to the bottom of the Adam; but the candle wick was so long that everyone caught on before it actually got that far down:  The S&P made an Adam and Eve bottom back in May/June of 2010:  The body of the Adam is improtand, and typically is rather large, which is most likely why the S&P chart above didn't quite make it to the bottom of the Adam wick. If the body of the Adam is too small it might be a HAMMER, and just reverse without going to the bottom of the wick, like CTXS did June 2010:  Sometimes they may go down a second time, so you can make money twice. That is what DD did this year:  Don't ever 'bet the farm' on this pattern though, because sometimes it totally fails like it did on the S&P in May 2010. Well, it did try, so a good stop would have saved me:  |