Horn Bottoms

As of 10/15/2020

Indus: 28,494 -19.80 -0.1%

Trans: 11,989 +101.34 +0.9%

Utils: 875 +0.03 +0.0%

Nasdaq: 11,714 -54.86 -0.5%

S&P 500: 3,483 -5.33 -0.2%

YTD

-0.2%

+10.0%

-0.4%

+30.6%

+7.8%

Targets Overview: 09/29/2020

29,300 or 27,400 by 11/01/2020

12,000 or 11,000 by 11/01/2020

915 or 840 by 11/01/2020

12,800 or 11,300 by 11/01/2020

3,700 or 3,400 by 11/01/2020

CPI (updated daily): Arrows

on 9/25/20

As of 10/15/2020

Indus: 28,494 -19.80 -0.1%

Trans: 11,989 +101.34 +0.9%

Utils: 875 +0.03 +0.0%

Nasdaq: 11,714 -54.86 -0.5%

S&P 500: 3,483 -5.33 -0.2%

YTD

-0.2%

+10.0%

-0.4%

+30.6%

+7.8%

Targets Overview: 09/29/2020

29,300 or 27,400 by 11/01/2020

12,000 or 11,000 by 11/01/2020

915 or 840 by 11/01/2020

12,800 or 11,300 by 11/01/2020

3,700 or 3,400 by 11/01/2020

CPI (updated daily): Arrows

on 9/25/20

Bulkowski on the Horn Bottom Chart Pattern

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

Horn bottoms are H-shaped chart patterns that appear on all time scales, but the weekly charts show better performance over those appearing on the dailies. Discovered by Thomas Bulkowski in 1998. The statistics in this article were gathered from patterns on the weekly scale.

Horn Bottoms: Important Bull Market Results

Overall performance rank (1 is best): 2 out of 3 (weekly scale)

Break even failure rate: 6%

Average rise: 59%

Percentage meeting price target: 74%

The above numbers are based on more than 1,000 perfect trades on the weekly scale. See the glossary for definitions.

Horn Bottoms: Identification Guidelines

Characteristic	Discussion
Weekly chart	Use the weekly chart to locate horns.
Price trend	Downward leading to the pattern.
Shape	Looks like an inverted steer's horn, two parallel price spikes separated by a week.
Spikes	The spikes should be longer than most in the past year, but in the updated statistics, I didn't concern myself with spike length and performance improved... They should plummet below the surrounding price landscape, including the middle week.
Confirmation	The pattern confirms as valid when price closes above the highest price in the 3-week pattern.

Horn Bottoms: Trading Tips

Trading Tactic	Explanation	The Measure Rule Spike Volume Inside Week
Measure rule	See the Measure Rule figure to the right. Compute the height from the highest price (point A) to lowest price (B) in the 3-week pattern then multiply it by the above 'percentage meeting price target.' Add the result to the highest high in the pattern (A) to get a target (C).
Uptrends	Some horns appear near the end of uptrends, so watch for a trend change.
Downtrends	Horns will usually not mark the end of a downtrend, but they will be close, say within a buck or so.
Height	Tall horns perform better than short ones.
Volume	Horns with heavy breakout volume tend to do well. Horns with volume heavier on the left spike and light on the right tend to outperform. The Spike Volume figure to the right shows an example of heavy left spike volume.
Inside week	When the right horn is inside the trading range of the left horn (an inside week), the horn tends to outperform. The Inside Week figure to the right shows an example of this. Spike AB is taller and completely covers spike CD.
Price Difference	Horns with a large price difference between the spike valleys tend to outperform. Using the Inside Week figure to the right, that means the price difference between bottoms B and D.
Confirmation	Wait for price to close above the highest price in the pattern before taking a position. However, you can enter a trade by placing a buy stop a penny above the top of the highest price in the 3-week pattern.

Horn Bottoms: Example

The above figure shows two examples of horn bottoms on the weekly scale. Each pair of red Hs represents one horn bottom. Price confirms the pattern when it closes above the highest peak in the 3-week pattern. I show this as a red line. Buy the following week or place a buy stop at the confirmation price.