Horn top / bottom pricing model

Horn Top / Bottom (Pair of Horns at the Top / Bottom) is a highly identifiable reversal price pattern on the chart. Therefore, you need to understand the structure and characteristics of this model, from which to devise a reasonable trading strategy to gain profit in the forex market. In the article below, we will show you how to identify and trade with the Horn Top / Bottom model.

What is Horn Top / Bottom?

Horn Top is a reversal pattern consisting of 3 bars in which 2 bars on the sides jerk up high with the apex near the top while the middle bar is short and has a lower peak. Therefore, the image of Horn Top looks like the horns of a cow or the "H".

In contrast, Horn Bottom (Pair of Horns at the Bottom) is a reversal pattern consisting of 3 bars in which 2 bars on both sides drop low with the bottom area nearly equal while the middle bar is short and has a higher bottom. The image of Horn Top looks like the horns of a cow pointing downwards.

Features and price targets of Horn Top / Bottom

The Horn Top / bottom model will increase efficiency if any of the following characteristics are found:

The previous trend must be a trend formed in a long time, in which Horn Top appears after an uptrend, and Horn Bottom appears after a downtrend.

Do not trade when the Horn Top pattern appears at the bottom of the downtrend or when the Horn Bottom pattern appears at the top of the uptrend.

Horn bottom for Horn Top and horn top for Horn Bottom so long is more effective than short bottom / horn.

The higher the trading volume, the more reliable the model will be.

For the Horn Top model, a sell signal is given when the price drops and breaks through the horn bottom. Here, the target price of the model will be approximately 75% of the height of the model, from breakout point down.

Similarly, for the Horn Bottom model, a buy signal will be given when the price rises and breaks through the horn top. Here, the target price of the model will be about 70% of the height of the model, from the breakout point up.

Actual example of Horn Top / Bottom model

Below is a practical example of the Horn Top model. After a very strong upturn earlier, the Horn Top pattern was formed with 2 high-price bars with 2 peaks being nearly equal, creating a resistance level. The market then no longer increased sharply and fell slightly below.

Instruction to trade with the Horn Top / Bottom model

As mentioned above, we will enter a reversal order when the price breaks out of the bottom of the pattern as shown below.

The take-profit point should be set equal to the price target of the model according to the calculation method described above if it is to be safe or if it is possible to continue holding a position waiting for an exit signal to take profit.

Stop loss can be placed on top of Horn Topp or on the bottom of Horn Bottom. However, such setup will give risk reward rate not very attractive. So, if you feel the signal of a breakout at a breakout point is quite strong, you can set a stop loss at the breakout area, a few pips from the breakout point.

summary

Through the article introducing the Horn Top / Bottom model, we hope you understand the characteristics and how to use this model to be able to profit from forex. Good luck!

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Author: Tin Nguyen