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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 Measured Move Up

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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 10/22/2018
25,317 -126.93 -0.5%
10,436 -3.05 0.0%
742 -4.28 -0.6%
7,469 19.60 0.3%
2,756 -11.90 -0.4%
YTD
2.4%
-1.7%
2.6%
8.2%
3.1%
Tom's Targets    Overview: 10/11/2018
26,000 or 24,600 by 11/01/2018
10,200 or 11,100 by 11/01/2018
755 or 715 by 11/01/2018
7,700 or 7,200 by 11/01/2018
2,850 or 2,700 by 11/01/2018

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.

Updated with new statistics 5/29/2018.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 510 to 521. 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 measured move, as I have implemented it, is an improved version of the traditional pattern. I find them automatically now. Patternz has the same algorithm built in, so you won't have to guess if one occurs. It'll show you.

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, at least my implementation of it. This version of the pattern sees the second leg meet or exceed the price of the first leg 67% of the time.

Measured move up chart pattern
Measured Move Up Chart Pattern Components

 

Important Bull Market Results for the Measured Move Up

Average first leg price rise: 13% in 10 days
Average corrective phase retrace: 84% in 9 days
Average second leg price rise: 13% in 13 days.
Percentage meeting price target: 67%
Percentage meeting time target: 6% (exact matches only)

The above numbers are based on over 3,800 perfect trades. See the glossary for definitions.

Measured Move Up Identification Guidelines

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

CharacteristicDiscussion
TrendMeasured moves are reversal patterns so look for a downward price trend leading to the start of the measured move (for the best performance).
First legAny minor low which leads to a minor high.
Corrective phaseThe algorithm looks for retraces of at least 70%. Those lead to the best measure-rule performance.
Second legPrice ends the pattern at a minor high.
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Measured Move Up Trading Tips

Trading TacticExplanation
Measure ruleCompute the length of the first leg from the lowest valley (point A in the Measure Rule figure to the right) to the highest peak at the start of the corrective phase (point B) then multiply it by the above "percentage meeting price target." Add the result to the lowest valley in the corrective phase (point C) to get a price target.
BuyOnce the second leg begins (point C in the Measure Rule figure to the right), buy. If price drops below the corrective phase low (C), close out the trade.
TargetIf price nears the target or overhead resistance abounds near the target, close out the position.
TrendlineIf the projected price target of a measured move intersects a down-sloping trendline setup by prior price action, then expect price to reverse there.
RetraceThe larger the corrective phase retrace (the move from B to C in the Measure Rule figure to the upper right), the better the chance of meeting the price target.
Measured move up chart pattern measure rule
The Measure Rule
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Measured Move Up Example

Measured move chart pattern example

The above figure highlights two examples of a measured move up chart pattern. The first leg begins at point A and rises to the top of the corrective phase at B. Then price corrects to C before finishing the measured move up chart pattern at D. You can also nest measured moves. The sequence CDAB forms another measured move up.

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

-- Thomas Bulkowski

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Other Measured Move Up Examples

See Also

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners. Sped up my computer; ran it on 220 volts. Works greO$%?