As of 11/20/2024   Indus: 43,408 +139.53 +0.3%     Trans: 17,002 -26.31 -0.2%     Utils: 1,055 +1.25 +0.1%     Nasdaq: 18,966 -21.33 -0.1%     S&P 500: 5,917 +0.13 +0.0%	YTD  +15.2%    +6.9%    +19.7%    +26.3%    +24.1%	Targets    Overview: 11/12/2024     46,000 or 43,000 by 12/01/2024   18,000 or 16,600 by 12/01/2024   1,075 or 1,000 by 12/01/2024   20,000 or 18,400 by 12/01/2024   6,100 or 5,800 by 12/01/2024
Chart Pattern Indicator: on 11/18/24

As of 11/20/2024   Indus: 43,408 +139.53 +0.3%     Trans: 17,002 -26.31 -0.2%     Utils: 1,055 +1.25 +0.1%     Nasdaq: 18,966 -21.33 -0.1%     S&P 500: 5,917 +0.13 +0.0%	YTD  +15.2%    +6.9%    +19.7%    +26.3%    +24.1%
Targets    Overview: 11/12/2024     46,000 or 43,000 by 12/01/2024   18,000 or 16,600 by 12/01/2024   1,075 or 1,000 by 12/01/2024   20,000 or 18,400 by 12/01/2024   6,100 or 5,800 by 12/01/2024
Chart Pattern Indicator: on 11/18/24

Bulkowski on Measured Move Down Patterns

Updated with new statistics 8/27/2020.

For more information on this pattern, read Encyclopedia of Chart Patterns Second Edition, pictured on the right, pages 496 to 509. That chapter gives a complete review of the chart pattern, including tour, identification guidelines, focus on failures, performance statistics, trading tactics, and sample trade. Below is just a sliver of the information contained in the book.

The idea behind a measured move is that the second leg will equal the first leg in both price and time. That's for the ideal pattern. Reality shows the pattern falls short of expectations, but it's close.

Important Results Identification Guidelines Trading Tips Example See Also

Measured Move Down Chart Pattern

Measured Move Down: Important Bull Market Results

The above numbers are based on more than 950 perfect trades. See the glossary for definitions.

Measured Move Down: Identification Guidelines

I found the measured move down pattern two ways. The statistics in this article are for those found manually. Below is how I found them automatically (built into Patternz).

The algorithm finds three consecutive turns, starting with a minor high (top of leg 1) then a minor low (start of the corrective phase), and then a retrace of at least 70%, ending in a minor high (the end of the corrective phase). It's assumed that the next minor low will end the pattern at the bottom of the second leg.

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Measured Move Down: Trading Tips

Trading Tactic	Explanation	The Measure Rule
Measure rule	Compute the length of the first leg from highest peak (point A in the Measure Rule figure to the right) to lowest valley at the start of the corrective phase (B) then multiply it by the above "percentage meeting price target." Subtract the result from the highest peak in the corrective phase (C) to get a price target.
Short	Short once the second leg begins. If price rises above the corrective phase high, close out the short.
Target	If price nears the target or support abounds near the target as price approaches, close out the position.
Retrace	The larger the corrective phase retrace, the better the chance of meeting the price target.

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Measured Move Down: Example

The above figure shows an example of a measured move down chart pattern. Price begins the first leg down at A and ends at B where it enters the corrective phase. The peak in the corrective phase is at C and that marks the start of the second leg down. The second leg ends at D before price pulls back to E and eases down thereafter.

Please note that this example was found manually, not using my new algorithm.

-- Thomas Bulkowski

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See Also

• Retraces, measured moved. Do large or small retraces result in better performance of measured moves?
• Chart pattern review 5 A review of islands and measured moves.
• Learn about the simple ABC correction which contains a measured move.
• The ABC correction is part of an Elliott wave zigzag. Read about it.

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