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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Measure Rule

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Busted
Patterns
Candles Chart
Patterns
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Patterns
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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 03/27/2017
20,551 -45.74 -0.2%
8,935 6.33 0.1%
702 -3.50 -0.5%
5,840 11.63 0.2%
2,342 -2.39 -0.1%
YTD
4.0%
-1.2%
6.5%
8.5%
4.6%
Tom's Targets    Overview: 03/14/2017
20,100 or 21,250 by 04/15/2017
8,500 or 9,500 by 04/15/2017
675 or 715 by 04/01/2017
5,950 or 5,650 by 04/15/2017
2,275 or 2,425 by 04/15/2017
Mutt Losers: None YTD
Mutt Winners: None YTD

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

My book, Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the left, has the measure rule statistics for most of the 63 chart and event patterns covered by the book.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

$ $ $

Use the measure rule to predict a price target. The rule varies from chart pattern to pattern as the below table shows. Usually the measure rule is the height added to (upward breakouts) or subtracted from (downward breakouts) the breakout price.

Unfortunately, that formula doesn't work well. Instead, multiply the height by the "percentage meeting price target," which I show in the below table as percentages. The result should be a closer and more accurate price target.

For example, if a broadening top has a high price of 25 and a low of 20 with a breakout of 22, an upward breakout target in a bull market would be B + ((H - L) * 62%) = 22 + ((25 – 20) * 62%) = $ 25.10. A downward breakout in a bull market would use the formula B - ((H - L) * 37%) = 22 – ((25 – 20) * 37%) = $ 20.15.

The formula may look complex but it's not. Anyone with a doctorate in mathematics can figure it out in a few hours.

-- Thomas Bulkowski

Notes:

B = The breakout price which is where price pierces a trendline.
CBG = The closing price before a gap.
CPH = The highest price in the corrective phase.
CPL = The lowest price in the corrective phase.
H = Price of the highest peak in the chart pattern
L = Price of the lowest valley in the chart pattern
H – L is the price of the highest peak minus the price of the lowest valley.
HL = Lowest price in the head.
HH = Highest price in the head.
NL = Neckline, measured vertically from the peak or valley in the head.
RL = Price of the right saucer lip.

Measure Rule in Bull Markets

Bull Market Chart PatternThe Measure Rule
Broadening Bottoms, down breakoutB - ((H – L) * 44%)
Broadening Bottoms, up breakoutB + ((H – L) * 59%)
Broadening Formations, Right-Angled and Ascending, down breakoutL - ((H – L) * 32%)
Broadening Formations, Right-Angled and Ascending, up breakoutB + ((H – L) * 68%)
Broadening Formations, Right-Angled and Descending, down breakoutB - ((H – L) * 44%)
Broadening Formations, Right-Angled and Descending, up breakoutH + ((H – L) * 63%)
Broadening Tops, down breakoutB - ((H – L) * 37%)
Broadening Tops, up breakoutB + ((H – L) * 62%)
Broadening Wedges, Ascending, down breakoutLowest low or B - ((H – L) * 58%)
Broadening Wedges, Ascending, up breakoutB + ((H – L) * 69%)
Broadening Wedges, Descending, down breakoutB - ((H – L) * 36%)
Broadening Wedges, Descending, up breakoutHighest high or B + ((H – L) * 79%)
Bump-and-Run Reversal Bottoms, up breakoutHighest high or B + ((H – L) * 68%)
Bump-and-run Reversal Tops, down breakoutB - ((Lead-in height) * 78%)
Cup-with-Handle, up breakoutB + ((H – L) * 50%)
Cup-with-Handle, Inverted, down breakoutB - ((Handle height) * 47%)
Diamond Bottoms, down breakoutB - ((H – L) * 63%)
Diamond Bottoms, up breakoutB + ((H – L) * 81%)
Diamond Tops, down breakoutB - ((H – L) * 76%)
Diamond Tops, up breakoutB + ((H – L) * 69%)
Double Bottoms, Adam & Adam, up breakoutH + ((H – L) * 66%)
Double Bottoms, Adam & Eve, up breakoutH + ((H – L) * 66%)
Double Bottoms, Eve & Adam, up breakoutH + ((H – L) * 66%)
Double Bottoms, Eve & Eve, up breakoutH + ((H – L) * 67%)
Double Tops, Adam & Adam, down breakoutL - ((H – L) * 72%)
Double Tops, Adam & Eve, down breakoutL - ((H – L) * 69%)
Double Tops, Eve & Adam, down breakoutL - ((H – L) * 72%)
Double Tops, Eve & Eve, down breakoutL - ((H – L) * 73%)
Flags, down breakoutFlag high - ((Flagpole height) * 47%)
Flags, up breakout Flag low + ((Flagpole height) * 64%)
Flags, High and Tight, up breakoutB + (Half the rise leading to flag top)
GapsNone
Head-and-Shoulders Bottoms, up breakoutB + ((NL – HL) * 74%)
Head-and-Shoulders Bottoms, Complex, up breakout B + ((NL – HL) * 74%)
Head-and-Shoulders Tops, down breakoutB - ((HH - NL) * 55%)
Head-and-Shoulders Tops, Complex, down breakoutB - ((HH - NL) * 53%)
Horn Bottoms, up breakoutH + ((H – L) * 76%)
Horn Tops, down breakoutL - ((H – L) * 70%)
Islands Reversals, down breakoutL - ((H – L) * 62%)
Islands Reversals, up breakoutH + ((H – L) * 69%)
Islands, Long, down breakoutCBG - ((H – L)/2 * 78%)
Islands, Long, up breakoutCBG + ((H – L)/2 * 82%)
Measured Move Down (second leg target)CPH - ((H – CPL) * 35%)
Measured Move Up (second leg target)CPL + ((CPH - L) * 45%)
Pennants, down breakoutPennant high - ((Flagpole height) * 51%)
Pennants, up breakoutPennant low + ((Flagpole height) * 60%)
Pipe Bottom, up breakoutH + ((H – L) * 83%)
Pipe Tops, down breakoutL - ((H – L) * 70%)
Rectangles Bottoms, down breakout L - ((H – L) * 50%)
Rectangles Bottoms, up breakoutH + ((H – L) * 85%)
Rectangles Tops, down breakoutL - ((H – L) * 63%)
Rectangles Tops, up breakoutH + ((H – L) * 80%)
Rounding Bottoms, up breakoutRL + ((RL – L) * 57%)
Rounding Tops, down breakoutRL - ((H - RL) * 24%)
Rounding Tops, up breakoutH + ((H - RL) * 61%)
Scallops, Ascending, down breakout L - ((RL – L) * 25%)
Scallops, Ascending, up breakoutRL + ((RL – L) * 58%)
Scallops, Ascending and Inverted, up breakoutH + ((H – L) * 61%)
Scallops, Descending, down breakout L - ((H – L) * 30%)
Scallops, Descending, up breakoutRL + ((H – L) * 35%)
Scallops, Inverted and Descending, down breakoutL - ((H – L) * 38%)
Three Falling Peaks, down breakoutL - ((H – L) * 33%)
Three Rising Valleys, up breakoutH + ((H – L) * 58%)
Triangles, Ascending, down breakoutB - ((H – L) * 68%)
Triangles, Ascending, up breakoutH + ((H – L) * 75%)
Triangles, Descending, down breakout L - ((H – L) * 54%)
Triangles, Descending, up breakoutB + ((H – L) * 84%)
Triangles, Symmetrical, down breakoutB - ((H – L) * 48%)
Triangles, Symmetrical, up breakoutB + ((H – L) * 66%)
Triple Bottoms, up breakoutH + ((H – L) * 64%)
Triple Tops, down breakoutL - ((H – L) * 40%)
Wedges, Falling, down breakoutB - ((H – L) * 30%)
Wedges, Falling, up breakoutHighest high or B + ((H – L) * 70%)
Wedges, Rising, down breakoutLowest low or B - ((H – L) * 46%)
Wedges, Rising, up breakoutB + ((H – L) * 58%)
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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Let's revisit the whole 'Hope I die before I get old' thing.