Horn Bottom: Twin Spikes That Mark a Low

Key Takeaways

• A horn bottom is two unusually long downward spikes separated by one bar, best seen on weekly charts.
• It is a bullish reversal pattern that confirms when price closes above the highest high of the three bars.
• The most common mistake is buying before that confirming close above the pattern high.
• Bulkowski's data shows a very low break-even failure rate near 6% on weekly charts.

What It Is

The horn bottom is a chart pattern Tom Bulkowski identified and documented. It consists of two price spikes that plunge downward, separated by a single bar, with all three sitting well below the surrounding price action. On a weekly chart, the middle bar represents one week between the two horns.

Both downward spikes should be long, longer than most spikes over the prior year, and the bar between them should have a low that is higher than the two spike lows. The pattern is a short-term bullish reversal that appears near the bottom of a downtrend. Bulkowski found it performs better on weekly charts than on daily ones.

The Intuition

Two deep spikes close together show that sellers twice drove price sharply lower, and twice failed to keep it there. The single bar between the horns holds above the spike lows, a small sign that selling pressure could not extend.

That repeated rejection at a low level signals that supply is running out. The first spike flushes out weak holders, the second confirms that the lows will not hold, and the failure to break lower between them reveals exhaustion. When price then breaks above the pattern, buyers who were waiting step in and the reversal higher begins.

How the Horn Bottom Pattern Works

The structure mirrors the horn top, flipped downward:

Bar 1: tall downward spike
Bar 2: a single separating bar with a higher low (one week on a weekly chart)
Bar 3: a second tall downward spike near the first

Both spikes should be unusually long relative to the past year and should stand out below nearby prices. The pattern confirms only when price closes above the highest high of the three-bar formation. Until that close, the horns are just two spikes, not a confirmed bottom.

Bulkowski provides a measure rule for the target. Take the height from the highest high of the pattern to the lowest low, multiply by the percentage that historically reaches the target, then add to the highest high:

Target = Highest high + (Highest high - Lowest low) x 74%

His weekly statistics show a break-even failure rate around 6%, one of the lowest among the patterns he tracks, and a high average rise once confirmed, with about 74% of cases reaching the full measured target. These figures are historical averages across many stocks, not promises, and large average-rise numbers can be skewed by a handful of big winners, so treat the upside with caution and always use a stop.

Worked Example

A stock falls for months on a weekly chart. One week it spikes down to 30, the next week the low only reaches 34, and the following week it spikes down again to 31. The two spikes at 30 and 31 sit well below the surrounding weeks, with a higher-low bar between them, forming a horn bottom. The highest high across the three weeks is 36.

The pattern confirms when price later closes above 36. Using the measure rule, the height from the 36 high to the 30 low is 6 points. Multiplying by 74% gives about 4.4, so the target is 36 plus 4.4, or roughly 40.4. A trader acting on the confirmed break might use the 30 spike low as a stop reference.

Common Mistakes

1. Buying before confirmation. The pattern is not valid until price closes above the highest high of the three bars. Two spikes alone do not confirm a bottom.
2. Using spikes that are too small. The horns must be unusually long compared with the past year. Ordinary dips do not qualify.
3. Applying it on the wrong time frame. Bulkowski found the horn bottom works best on weekly charts. Forcing it on short intraday charts weakens the signal.
4. Trusting the large average rise blindly. Average-rise figures can be inflated by a few outliers. Plan for a more modest move and let winners run with a trailing stop.
5. Skipping the stop. Even with a low failure rate, some horn bottoms fail. A stop below the spike lows protects against a continued downtrend.

Frequently Asked Questions

What is a horn bottom pattern in simple terms? It is two tall downward price spikes sitting close together with one bar between them, usually on a weekly chart. It signals that a downtrend may be about to turn up.

How does a horn bottom pattern affect investment decisions? A confirmed horn bottom can signal a time to buy or cover a short, with a measured target above the pattern and a stop below the spike lows. It works best near the end of a decline.

What is a real-world example of a horn bottom? A stock spiking down to 30 one week, holding higher the next, then spiking to 31 two weeks later, with both spikes well below nearby prices, forms a horn bottom once price closes above the pattern high.

How can investors use the horn bottom pattern effectively? Look for it on weekly charts, require both spikes to be unusually long, wait for a close above the highest high to confirm, apply the measure rule for the target, and set a stop below the spikes.

How is a horn bottom different from a double bottom? A horn bottom is two deep spikes separated by just one bar, a tight formation. A double bottom is two lows at a similar level usually separated by a wider peak, and it confirms on a break above that peak.

Sources

1. Bulkowski. "Horn Bottom Chart Pattern." https://thepatternsite.com/hornb.html
2. Bulkowski. "Pattern Index." https://thepatternsite.com/chartpatterns.html
3. Bulkowski. "Visual Index of Chart Patterns." https://thepatternsite.com/visualcpindex.html
4. Bulkowski, T.N. Encyclopedia of Chart Patterns. Wiley. https://thepatternsite.com/PatternReview4.html

Disclaimer

This article is educational content only and is not financial advice. Nothing here is a recommendation to buy, sell, or hold any security. Consult a licensed advisor before making investment decisions.