Cat Ears Pattern: How to Identify and Trade It

The cat ears pattern (also written cat's ears) is a rare chart pattern that forms when the trend is down. Price pauses, makes two short spikes up that are quickly sold back down (the two "ears"), with a narrow range between them (the "scalp"), then falls through the floor of that range and the decline goes on. It is read as a continuation pattern.

This guide will help you identify the cat ears phase by phase, tell them apart from related chart patterns, plan your trading around them, and know what we can and cannot say about their reliability. They have no widely accepted, measurable definition, so our bench tests one written reading of them on full market history and compares it with random bars on the same assets.

What is the cat ears pattern?

The cat ears pattern is a shape named after its appearance on a chart: two pointed spikes rising from a flat base, like the ears on a cat. It appears after a decline, while sellers rest. Each spike is a short burst of buying that fails: price jumps, cannot hold, and falls back into the range. When the second ear also fails and price closes under the support of the range, sellers are back in control and the trend resumes.

It is far less known than classic chart patterns such as the head and shoulders or the double top. It is not one of the classic textbook patterns, and the descriptions that cover it differ on the fine points of the rules, including where the shape starts. Treat it as a named variation of a well-known idea in technical analysis: failed rallies against the trend are a sign of weakness.

Why the cat ears matter for technical analysis

The cat ears are worth knowing for one reason: they put a name on a key piece of information, the failure of buyers to get through resistance during a decline. Learning to identify that behavior helps in two ways. A trader looking to sell short gets a defined trigger and a defined stop. Someone holding a stock as a long-term investment, or looking to buy one, gets a warning that the bull case is not yet supported by price movements. This guide treats the shape in that spirit: an important clue in your analysis of the balance between buyers and sellers, and a potential source of trading opportunities, but not a strategy on its own. The place to start is the same as for all types of chart patterns: the trend, the lines, the trigger.

How to identify the cat ears: the six phases

This guide splits the cat ears into six phases. All six should be visible before you call it. Our bench checks five points of them: the peak that starts the decline, the floor, the two ears and the low of the scalp between them; it does not model the pause as a separate phase. The anatomy chart numbers these five points and the signal; the floor, the low between the peak and the first ear, is the level the scalp low is measured against.

The two ears

The ears are short and sharp: a few bars up, a few bars down. Their tops do not need to be at the same level. What matters is that each spike is rejected quickly and the market returns to the range. A slow, rounded rise is not an ear.

The scalp and its support line

The scalp is the narrow range between the two ears. Draw a horizontal line along its lows: this support line is the trigger. In some versions the line sits near the low of phase 2; in others it is slightly higher. A second line along the top of the scalp acts as resistance, and the ears are the two moments buyers poke above it.

Volume

Volume is not part of our rule. If you use it, the reading that fits the story of the shape is heavier volume on the spikes and on the final breakout, and light volume during the scalp; we have not tested that reading. On currency pairs, where volume is not centralized, only price is available.

The psychology behind the cat ears

Each ear tells the same story. After a decline, some buyers think the bottom is in. Price jumps, but the buying does not attract follow-through, and sellers who missed the first leg down use the bounce to sell. It falls back into the range. The second ear repeats it: a new attempt, a new disappointment. By the time support gives way, two groups of buyers are trapped above it, and their exits add to the selling pressure. It is the same logic as a dead cat bounce, in two small steps instead of one.

Cat ears vs. double top and head and shoulders

Cat ears versus double top

The cat ears are easy to confuse with a double top, because both have two peaks. The differences matter.

In short, a double top ends a rise; cat ears interrupt a decline. Mixing them up leads to the wrong trade: the first is read as the start of a new trend, the second as the next leg of an existing one.

Cat ears versus head and shoulders

The head and shoulders has three peaks, the middle one highest, and forms at the end of a rise. Cat ears have two spikes and form during a decline. Both drop through a horizontal line (the neckline for one, the scalp floor for the other), but the first starts a new move and the second extends an old one.

Cat ears and the main types of chart patterns

In trading, technical analysis sorts chart patterns into a few families, based on what the trend did before and what it is expected to do next. Knowing the main types of chart patterns helps you read a rare chart pattern like the cat ears, which is a variation of the rectangle and the bear flag described below.

Reversal chart patterns

A reversal pattern signals that the trend may turn. The head and shoulders is a classic reversal pattern: three peaks, the middle one highest, with a neckline under them. When price closes below the neckline, the rise is considered over. The double top and the triple top follow the same logic with two or three peaks of similar height, and their mirror images mark the end of a decline. Among wedges, the rising wedge pattern, with two rising lines that converge, is read as bearish; the falling wedge pattern is read as bullish. Unlike a range, a wedge has both borders sloping in the same direction, and each new push makes less progress. A rising wedge after a long advance is the classic case; in classical chart analysis, a wedge that slopes against the main trend is read as a pause instead, and a wedge in the middle of a range as saying little.

Continuation chart patterns

Continuation patterns signal a pause before the trend goes on in the same direction. The cat ears belong here, with flags, pennants, rectangles and the cup and handle. The cup and handle is a bullish chart pattern: a rounded cup, a small handle, then a breakout above resistance. The bear flag is the closest classic relative of the cat ears: a sharp drop, a small upward-sloping range, then the next drop. A rectangle in a declining market with two quick spikes to resistance looks very much like cat ears.

Triangle chart patterns

The triangle family sits between the two. The descending triangle has flat support and falling resistance, and it is read as bearish, like the cat ears, but its highs step down steadily instead of spiking. The ascending triangle has flat resistance and rising support, and it is read as bullish. An ascending triangle in a downtrend, or a descending triangle in an uptrend, is rarer and less clear. The symmetrical triangle has two converging lines and can break in either direction. In each case, you draw the lines on the highs and lows of price movements and wait for price to settle outside them.

The shared thread: each of these chart patterns is defined by lines drawn on price movements, a trigger (the breakout) and an expected direction. That is what makes them testable. The cat ears pattern has no such standard rule, so our bench had to write one; it is given in the reliability section below. The Bart Simpson pattern is another shape built from sharp spikes: a jump, a flat top, then a drop back to the start.

How to trade the cat ears pattern

The trading plan follows the classic rules for a breakout in the direction of the trend.

When to get in

Stop loss

Place the stop above the high of the right ear. If the market climbs back above it, a third rally has worked and the idea is wrong. A tighter stop just above the top of the scalp gives a better reward for the same stake but is hit more often.

Price objective

Two methods set the objective. The measured move projects the height of the shape (from the top of the ears to the floor) down from the breakout level. The fixed ratio sets the objective at twice the amount at stake (2:1). Our bench uses the 2:1 rule for every chart pattern it tests, so results can be compared from one to another: it sells at the close below the scalp low, with the stop at the top of the right ear, and tracks the measured move separately.

Retest

Another approach waits for a retest: the market comes back up to the broken floor, which now acts as resistance, and fails there. The retest gives a second chance with a tighter stop, but it does not always happen.

Cat ears in stock, forex and crypto trading

The cat ears can appear in any market and on any timeframe, but each market adds its own noise.

• Stock market: on an individual stock, earnings news and opening gaps can create spikes that look like ears. Check whether a spike came from news before you treat it as a failed rally. For a long-term investment, a cat ears chart pattern on a stock you own is information about the trend, not an order to sell.
• Forex market: currency pairs trade around the clock, so spikes can come from a session open or an economic release. Without centralized volume, forex trading relies on price alone.
• Crypto market: sharp spikes are frequent in crypto trading, which makes ear-like shapes frequent; whether that makes each one less informative is not something we tested.

In every market, the key question for trading is the same: does the chart pattern add anything to a trade taken at random with the same stop and objective?

Best timeframes for the cat ears

No timeframe has been shown by data to work best: on our bench, none showed an edge. On daily charts, each ear spans a few sessions. Per bar, our bench detected it less often intraday than on daily charts (one every 113,094 hourly bars, against one every 54,001 daily bars), but an hourly chart has far more bars, so it shows more of them per month. Our strict rule also misses many cases on noisy markets, crypto first, and we have not tested whether spikes from news releases or session opens change the result.

Weekly charts fall in between: one every 88,714 weekly bars. One option is to use the timeframe you already trade and to check the trend on the next one up; we have not tested whether a daily downtrend improves cat ears on an hourly chart.

How to scan for cat ears patterns

We know of no standard scanner for cat ears patterns, because there is no standard rule. You can still narrow the search with filters that stock screeners offer: trading below the 50-day and 200-day moving averages, a narrow range over the last few weeks, and one or two sessions with a high well above that range. Then check each candidate by eye. The scan will help you find candidates; it will not tell you which patterns are worth trading.

Risk management for chart pattern traders

Rare chart patterns make it tempting to bet big on the few cases you find. Good risk management does the opposite:

• Put a small, fixed share of the account at stake on each trade, so that one loss does not change your next decision.
• Place the stop where the idea is wrong, above the right ear, then size the position from that distance.
• Accept that a loss is part of the method: in our data, the cat ears trade reached its 2:1 objective in 16.1% of daily trades.
• Spread your trading over several patterns and markets rather than waiting for one rare shape.

Technical analysis tools that help with chart patterns

Technical analysis offers other tools meant to confirm or reject what a shape suggests. The readings below are the classical ones; we have not tested any of them on the cat ears:

• Moving averages: cat ears under a declining 200-day moving average agree with the downtrend; cat ears above it are suspect.
• Resistance levels: a drop through the scalp that also takes out an older floor carries more information than one in the middle of nowhere.
• Trading volume: heavier volume on the drop helps separate a real move from noise on a stock chart.
• Price action: a bar that ends near its low on the day of the break shows that sellers kept control until the end of the session.
• Momentum indicators: an RSI already deep in oversold territory warns that the potential drop may be limited.

Each technical tool is a potential filter, and each filter needs testing. The key trap in technical trading is to keep adding conditions until old charts seem perfect; the important test is whether the combination works on charts you have not seen yet. A trader who wants to learn which chart patterns help their own price action trading should know that this takes many cases, not a few memorable ones.

A pattern described from memorable examples is an idea to test. Treat every pattern trading rule as a hypothesis until the data says otherwise.

Cat ears trading checklist

Before you act on a cat ears chart pattern, run through these checks. Each one comes from the rules above.

1. The trend is down on your chart and on the next timeframe up.
2. Price has formed a narrow range (the scalp) with a flat support line.
3. Two quick spikes above the range have failed, and price is back inside it.
4. Price has closed below the support line of the scalp.
5. Your stop is above the right ear and your position size fits that distance.
6. Your target and your exit plan are written down before the trade.

If one check fails, there is no cat ears trade.

Common mistakes

• Calling it against the trend. Two spikes from a range after a rise are not cat ears. Check the trend direction first: cat ears belong to downtrends, not to rising trends.
• Selling too early. Until the market settles under the floor, the range can resolve up as easily as down.
• Seeing ears in every bounce. The name is evocative, which makes it easy to see the shape after the fact. Write down your rules before you study the chart.
• Betting too much. Rare shapes tempt you to bet more. Keep the amount at stake per trade small and fixed: trading a rare shape is no reason to size up.

Advantages and limits

Advantages

• Clear trigger: horizontal support giving way.
• Natural stop level above the right ear.
• Trades with the existing move.
• Easy to fit into an existing trading plan.

Limits

• No standard definition, so two traders will not mark the same cases.
• Rare, so you cannot build a trading routine on it alone.
• No published, independent test of its results that we know of; ours relies on a rule we had to write.

Is the cat ears pattern reliable?

A fair test needs a fixed rule that a computer can apply to every chart, and the write-ups of this shape are loose: how sharp is an ear, how narrow is the scalp, how long can it last? So we wrote one reading of it from the description above, using thresholds our bench already applies to other shapes. This is one reading of a loosely defined pattern; we set it from chart reviews, never from results.

• The setting: a decline from a peak, at least twice as tall as the pattern, which is itself at least 3 ATR tall. Both ears stay in the lower half of that decline.
• The floor and the scalp: the low after the decline and the low between the ears sit within 20% of the pattern height of each other.
• The ears: each one rises at least 0.5 ATR per bar, the speed our bench requires of a V reversal, and the first one falls back to the scalp just as fast. Their tops do not need to match.
• The signal: a close below the low of the scalp. The stop goes at the top of the right ear, and the target at twice the risk. A close above the right ear first cancels the setup.

Turning points are swings of 2, 4 or 8 times the average true range. Volume is not used: it is not available on currency pairs, and the narrowness of the scalp is not measured either.

Here is what it found: the occurrences it detected on full price history, in crypto, forex, US stocks, ETFs, indices and commodities (the strict rule misses many on noisy markets, crypto first: at the highest noise level of our recall test, it found only 15% of the planted shapes), compared with the same trade placed on random dates on the same assets.

How to read it: each row is the short trade above, compared with the same entry, stop and target placed on random bars of the same assets. Expectancy is the average result per trade in units of risk (R), before fees. In no row did the cat ears beat chance, even on a simple test. On daily charts, all markets together, the trade lost slightly more than the same trade at random (−0.27 R against −0.21 R), a difference within the margin of error, which is why the row reads No clear edge; on US stocks alone, the gap is also within the range of chance, and stock data carries a survivorship bias we have not sized. The hourly forex and weekly rows have fewer than 30 trades: their figures are shown, not interpreted. Price reached the measured move, the height of the shape projected down from the scalp, before the stop and within 100 bars, in 41.6% of daily setups; that rate has no random baseline, so it describes the shape rather than an edge.

The cat ears can share their turning points with a double top, and the bear flag and the rectangle are close relatives. Each is tested on its own page with its own rule; the shapes overlap, so their figures should not be added to these. What this means here: two failed spikes inside a decline did not, in our data, predict the next leg down better than chance.

How to learn to spot the cat ears

A rare shape such as the cat ears is hard to learn from a textbook picture. A few habits help more than any list of chart patterns:

• Start with the classics. Learn the classic reversal patterns, the triangles (ascending, descending, symmetrical), the flags and the wedges first. The cat ears are easier to read once the rectangle and the bear flag are familiar.
• Study real charts. Go through a stock chart or a currency chart bar by bar, hide the right side, and mark what you see before you check what came next.
• Write the rules down. If you cannot write a rule for a shape, you cannot test it, and you will see it where you want to see it.
• Keep a trading journal. You will learn more from your own log than from any picture. Record every case you trade, the good ones and the bad ones, with the information you had at the time.
• Practice first. Use a demo trading account before you put money on a new shape.
• Compare with chance. The important question is not whether a shape sometimes works, but whether it works more often than a random trade with the same stop and objective.

FAQ

Summary

• The cat ears are a rare downtrend chart pattern: a pause in a downtrend with two quick, failed spikes up, then a drop under the floor of the range.
• They are not a double top: they confirm a downtrend instead of ending a rise.
• Trade the break under the scalp support, with a stop above the right ear and an objective at twice the amount at stake or the measured move.
• Tested with one written reading of the shape, they showed no proven edge: on 149 closed trades on daily setups, the 2:1 short trade reached its target 16.1% of the time, against 17.9% for the same trade on random dates, and lost more per trade, a row rated No clear edge.

About the author and the data. Written by Amaury, founder of PatternsWizard, who is passionate about finance, quantitative trading and data analysis. He built the PatternsWizard test bench, which detects each setup with published rules on full market history: crypto, forex, US stocks, ETFs, indices and commodities. Trades and win rates are compared with random bars on the same assets, excess returns with the rest of the market, with error margins and a correction for multiple testing. The cat ears rule on this page was set from chart reviews, never tuned on results. Statistics on this page were generated on November 5, 2026. The full methodology explains every step.