If you follow technical analysis, you need to know the Adam and Eve pattern – one of the strongest reversal patterns that appear before a significant change in price direction.

The pattern consists of two lows – the first is very sharp (Adam) in the shape of a V, and the second is rounded and slightly higher than the first (Eve). The idea is that you see the price attempt to go down but cannot break the first low, so it rebounds and moves up. This rebound forms the rounded second low, and here you start to feel that the downtrend has ended.

Important conditions for the Adam and Eve pattern to be valid: First, the formation period must be between two to six weeks – not much shorter or longer than this period. Second, the rounded low (Eve) must be at least 10% higher than the sharp low (Adam), with an ideal percentage of 20%. Third, the pattern is only confirmed when the price closes above the peak between the two lows.

Regarding the price target, you measure the vertical distance between the two lows and the middle peak, then add this distance above the breakout line – this will be the minimum target for the rise. As for the stop-loss, place it just below the sharp low (Adam).

The Adam and Eve pattern works the same way on highs but in reverse. It’s best to derive it from larger timeframes to get stronger and more reliable signals. When you see this pattern forming, you can anticipate it even before it completes, but the real confirmation comes after breaking the line between the two upper points.