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Horn Tops

horn tops chart pattern

Horn Tops occur after an uptrend and consist of two taller than normal price spikes with roughly equivalent high prices (on a weekly chart) with a smaller price bar in between them. The pattern looks like two horns of a bull or the letter "H". A sell signal is triggered when price closes below the lowest low of the three price bars that create the horn top pattern.

Horn Bottoms

horn bottoms chart pattern

In contrast, a Horn Bottom occurs after a downtrend and consists of two taller than average weekly price spikes with similar low prices separated by a smaller price bar in between. A buy signal is triggered when prices close above the highest high in the pattern. When compared to the quite similar pipe bottom and pipe top formations, Kirkpatrick & Dahlquist (2010) state that horn tops are "not as effective as the pipe at bottoms and tops" (p. 375).

Horn Tops Average Downward Breakout Decline

red down arrow illustrating a 21% decline

According to Bulkowski (2005), the average height of a move downward after a sell signal is triggered for the horn top formation and before any 20% reversal correction is 21%;

Horn Bottoms Average Upward Breakout Gain

green up arrow showing 35% gain

The average height of a move upward after a buy signal is triggered for the horn bottom formation is 35%.

Price Targets

The suggested price target for horn tops and horn bottoms given by Bulkowski (2005) is shown below:

Horn Bottom Breakout Upward: Highest of the Three Price Bar Highs + ((Highest of the Three Price Bar Highs - Lowest of the Three Price Bar Lows) * 70%)
Horn Top Breakout Downward: Lowest of the Three Price Bar Lows - ((Highest of the Three Price Bar Highs - Lowest of the Three Price Bar Lows) * 76%)

Traits that Increase the Effectiveness of the Horn Top and Bottom

Traits that increase the effectiveness of the pipe pattern are given next (Bulkowski, 2005):

  • Horn Tops perform best when they occur after a long, multi-month uptrend
  • Horn Tops should be avoided when they occur after a downtrend
  • Tall Horn Bottoms are superior than shorter Horn Bottoms
  • Horn Bottoms with heavy breakout volume perform better

Horn Bottom Chart Example

stock etf chart example of horn bottom

The weekly chart of the iShares MSCI Spain ETF (EWP) illustrates a horn bottom. It occurs after a downtrend; the prices before and after the horn bottom pattern are near the upper portion of the horn bottom pattern, which means that the pattern stands out on a chart. Once prices close above the highest high of the pattern, a buy signal is triggered, which in this chart resulted in a nice reversal of trend to the upside.

Works Referenced

  1. Nison, S. (2003) The Candlestick Course. Hoboken: John Wiley & Sons.
  2. Nison, S. (1994) Beyond Candlesticks: New Japanese Charting Techniques Revealed. New York: John Wiley & Sons.
  3. Nison, S. (1991) Japanese Candlestick Charting Techniques. New York: New York Institute of Finance.
  4. Rhoads, R. (2008) Candlestick Charting For Dummies. Hoboken: Wiley Publishing.
  5. ThinkorSwim. (2011). ThinkorSwim Resource Center: Candlestick Patterns Library.
  6. The Pattern Site. (2005). Bulkowski's Horn Bottoms . Retrieved June 1, 2012, from http://thepatternsite.com/hornb.html
  7. The Pattern Site. (2005). Bulkowski's Horn Tops . Retrieved June 1, 2012, from http://thepatternsite.com/hornt.html