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Horn Chart Patterns – Useful Profitable Bar Patterns [2024]

Horn chart patterns consist of two long bars (horns) separated by one small bar. 

Horn chart patterns are straightforward trend reversal bar chart patterns that typically indicate long-term trend reversals.

With average return of more than 30% and 70% probability of profit, I consider them best bar chart patterns for long term trend trading.

Horn Chart Pattern guide
Horn Chart Pattern

Table of Contents


There are two types of horn chart patterns:

  1. Horn Top Pattern

  1. Horn Bottom Pattern

It is highly recommended to use the horn patterns on weekly charts to increase its effectiveness.

This blog will go over the identification and practical approach in using these patterns.

Horn Top Pattern

Horn top patterns are rare, but when they do appear, they are very significant, especially after a long uptrend.

Horn tops are bearish reversal patterns that become more significant after a long uptrend.

While conducting research and back testing, I discovered that the horn tops, when combined with other bearish reversal signals such as the head and shoulders, proved to be 70% more reliable.

How to identify ?

horn top pattern

As the name implies, the horn bar chart pattern resembles horns, with two spikes with long bodies separated by one bar with a short body (shorter than the length of two long spikes).

Using weekly charts, use the table below to confirm horn top appearance –

Prior TrendLook for long-term uptrends that are strong.
StructureTry to find two spikes that are separated by one week and stand out in terms of spike length.
Extra ConfluenceSwitch to daily candles and look for a possible head and shoulders formation (use this as an extra confluence).
ConfirmationWhen prices close below the pattern’s lowest price, the pattern is confirmed.
Table of Identification

Trading Strategy

entry horn top pattern
Entry Horn Top Pattern
  1. Confirm the formation of the horn tops pattern using the identification guidelines listed in the table above.

  1. If prices close below the lowest price in the pattern, switch to the daily candlestick chart and wait for price action.

  1. Wait for a retest and confirmation of a potential downtrend if prices come to retest the price level marked for potential entry.

  1. If prices do not come for retest within a few days place entry directly. 

  1. If a head and shoulder pattern is visible on the daily charts, use the head and shoulders entry method of neckline breakout.

  1. The target should always be defined by risk to reward, because a long term trend reversal may result in strong bearish price action.

Psychology behind horn top pattern

The psychology behind the horn tops is simple –

When there is a long bullish trend building up for months, volume spikes up high and market participants push prices to a record level, which marks the long spike ( first horn).

Most market participants want to book profits or sell their positions next week, but for new participants, it is an opportunity to jump into the rally. This tendency causes prices to stall in between and forms a small body bar on a weekly basis.

The strong bullish momentum follows when prices cross the previous week’s high and continue to move higher near the highs of the previous horn formation.

If prices are unable to break the previous all-time high of a strong uptrend, there is much speculation, and if prices close below the lowest low of all three spikes, everyone begins to panic in anticipation of a bearish reversal.

Pro Tips for trading

  • Don’t make the “jumping the gun” error; wait for the horn patterns to be fairly visible. There are patterns which look like horn tops but they are not.

  • Use volume analysis for extra confluence, volume is a great indicator to gauge “fear” and “greed” in markets.

  • The presence of high volume on the breakout indicates that the pattern is reliable and suitable for trading.

  • If there is a trendline prior to pattern formation, combine your knowledge of trendline trading for maximum impact.

  • Don’t be surprised if prices continue to fall for another two or three months; the drop has been observed to be around 30% – 40% in most cases. 

  • Length of spikes do have importance in the pattern, the more height indicates much better possibility of bearish reversal.

Horn Bottom Pattern

Horn bottom patterns appear at the end of a downtrend and have a slightly higher frequency than horn top patterns.

Horn bottoms are bullish reversal patterns that occur after a strong downtrend.

While conducting research and back testing, I discovered that when combined with other bullish reversal signals such as the head and shoulders, proved to be 75% more reliable.

How to identify ?

horn bottom pattern

The pattern consist of two downward price spikes which are separated by a week of short price bars.

Use the weekly charts and the below table for identification –

Prior TrendLook for long-term downtrends that are strong.
StructureTry to find two downward spikes that are separated by one week and stand out in terms of spike length.
Extra ConfluenceSwitch to daily candles and look for a possible inverse head and shoulders formation (use this as an extra confluence).
ConfirmationThe pattern is considered to be confirmed when prices close above the pattern’s highest high.
Table for identification – Horn Bottoms

Trading Strategy

entry horn bottom pattern
Entry for horn bottom pattern
  1. Confirm the formation using the identification guidelines listed in the table above.

  1. If prices close above the pattern’s highest high, switch to the daily candlestick chart and watch for price action.

  1. If prices come to retest the price level marked for entry, look for a retest and confirmation of a potential uptrend.

  1. If prices do not come for retest within a few days place entry directly. 

  1. Use the neckline breakout of inverse head and shoulder entry if an inverse head and shoulder pattern is visible on the daily charts.

  1. The target should always be defined by risk to reward, because a long term trend reversal may result in strong bullish price action.

  1. Breakout volume can be used to filter out bad trades.

Psychology behind horn bottom pattern

In a months-long downtrend, selling is prevalent in markets, and the formation of large downward spikes marks the first horn.

When such a large selling momentum pauses due to profit booking and new market participants’ interest, the market pauses for the next week and a small price bar is visible.

When prices fall to a level near the first horn and are unable to move lower than the previous support level marked by the first horn, the second horn appears.

If prices close above the highest high of all three spikes, this signals a potential bullish reversal and strong buying price action is to be followed.

Tips for trading horn bottom

  • The most important aspect of trading these patterns is identifying them, following pattern identification guidelines, and not entering premature pattern formation.

  • The greater the height of the downward spikes, the more reliable the pattern.

  • Use breakout volume analysis for extra confirmation.

  • Horn bottom patterns can be used in conjunction with trendlines; opportunities involving trendlines and horn bottom patterns have a higher win ratio.

  • When there is a valid bullish reversal, prices typically move higher by 40% to 50% (don’t book your profits too soon, ride the trend).

Bottom line

  • Statistics and research strongly support the reliability of the horn chart patterns, with a nearly 73% average win rate. Patterns are very efficient for long term trend traders.
  • In my personal experience, I have found very few horn chart pattern appearances that are aligned to all identification conditions, but when they do, I never pass up the opportunity to trade.
  • The average return on trading horn chart patterns is 30%, which is quite impressive for a three bar pattern.
  • If one combines horn top and bottom formation along with trendlines, head and shoulders and volume analysis no other indicator is required for entry signal.
  • Horn chart Pattern is another bar pattern used in price action trading.

Author is Senior Technical Analyst
At Bulls Arena Trading
info@bullsarenatrading
New Delhi
India

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Author

  • RUPIN JOSHI

    Rupin Joshi Senior Technical Analyst, Finance Writer, and Trading ExpertRupin Joshi is a seasoned Trading Expert with over a decade of experience. As a prolific Finance Writer, he has authored numerous research papers in Technical Analysis and Price Action. Rupin's insights and strategies have earned him global recognition, including awards in Trading Competitions. Currently serving as the Director at Bulls Arena Trading, he continues to empower traders and investors with his expertise and innovative approaches.