Bulkowski’s Horn Bottoms

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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. Performance is best in a bear market. Discovered by Thomas Bulkowski in 1998. For more information see pages 438 to 450 of the book Encyclopedia of Chart Patterns, Second Edition and the following...

Important Results

Identification Guidelines

Trading Tips

Example

Horn bottom chart pattern

Important Bull Market Results

Overall performance rank (1 is best): 14 out of 23

Break even failure rate: 9%

Average rise: 35%

Throwback rate: 29%

Percentage meeting price target: 76%

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. 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.

Trading Tips

Trading Tactic Explanation

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 complete 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.

Throwbacks Throwbacks hurt performance.

Confirmation Wait for price to close above the highest price in the pattern before taking a position.

The Measure Rule

Spike Volume

Inside Week

Example

Horn bottom chart pattern 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.