Horn Pattern Reversals with EMA and ATR Filters

Summary

This price-action strategy looks for a three-bar Horn structure and waits for a fourth confirmation bar to break beyond the preceding pattern. A bullish setup uses a higher middle low, bullish outer bars, and a bullish confirmation close above the pattern highs; the bearish setup mirrors those conditions. The confirmation bar must also agree with the direction of the EMA trend filter, set to 20 periods by default, while a range greater than ATR is required on the confirmation or preceding bar.

Entries are placed one tick beyond the confirmation close. Stops sit beyond the Horn structure’s extreme, and the profit target is set at one unit of risk. The document describes configurable EMA and ATR settings and gives ETH/USDT Binance futures backtest settings on two-hour bars, but reports no performance results.

Potential weaknesses include false breakouts, slippage in low-liquidity markets, and sensitivity to filter settings. The text proposes testing higher-timeframe confirmation, pullback entries, and adaptive targets; it does not provide evidence that these changes improve outcomes.

Key ideas

• The setup defines bullish and bearish Horn structures using three bars and a fourth-bar breakout confirmation.
• An EMA filter requires entries to align with the filtered trend direction.
• An ATR range condition screens out some low-volatility setups.
• Stops are placed beyond the pattern extreme, with a one-risk-unit profit target.
• The published backtest settings contain no reported results to assess the strategy’s performance.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.