I noticed that many traders overlook the Adam and Eve reversal pattern, even though it is one of the strongest signals of a trend reversal. This pattern appears at the end of a downtrend and indicates that the price is likely to rise if the conditions are met correctly.

The idea is simple — when the price fails to break a previous low, it signals weakness in the downtrend. Trading volume decreases, and the price begins to stabilize, signaling a genuine reversal. The Adam and Eve pattern consists of two lows — the first low is sharp and very steep, resembling the letter V, and this is Adam. The second low is more rounded and softer, and this is Eve. The difference between them is very important for the pattern.

The conditions to focus on are: First, the formation period of the Adam and Eve pattern should be approximately between two weeks and six weeks; some allow longer periods but not less than two weeks. Second, the rounded low should be at least 10% higher than the sharp low, with an ideal ratio around 20%. Third, the pattern is only complete when the price closes above the high between the two lows.

The target calculation method is simple — measure the vertical distance between the two lows and the high between them, then add this distance above the breakout line. This distance becomes the minimum target for the upward move. Regarding stop-loss, it is preferable to place it just below the sharp low, usually at known support and resistance levels.

Using larger timeframes is very important because the Adam and Eve pattern provides stronger signals on weekly and monthly charts. On smaller timeframes, false signals are more common. During the formation of the second low, you can anticipate the pattern, but the real confirmation only comes after breaking the resistance line between the two lows. The good thing is that you can apply the same conditions to the peaks as well, but in reverse — the idea is the same.