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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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Market
Industrials (^DJI):
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Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 07/25/2014
16,961 -123.23 -0.7%
8,428 -38.45 -0.5%
557 -4.06 -0.7%
4,450 -22.55 -0.5%
1,978 -9.64 -0.5%
YTD
2.3%
13.9%
13.4%
6.5%
7.0%
Tom's Targets    Overview: 07/15/2014
17,300 or 16,500 by 08/01/2014
8,700 or 8,150 by 08/15/2014
575 or 535 by 08/01/2014
4,500 or 4,250 by 08/01/2014
2,050 or 1,900 by 08/01/2014
Mutt Winners: None YTD

Written by and copyright © 2005-2013 by Thomas N. Bulkowski. All rights reserved.

For more information on this pattern, read Encyclopedia of Chart Patterns, Second Edition, 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.

Measured moves are great for everything but trading. They tell you how far price is likely to rise, and how long it will take. The measured move up chart pattern is not always accurate hitting its price and time targets, but it does give you an estimate. If you insist on trading them, see the simple ABC correction. It's a nested measured move down inside a measured move up.

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: 46% in 87 days
Average corrective phase retrace: 47% in 32 days
Average last leg price decline: 32% in 60 days.
Percentage meeting price target: 45%
Percentage meeting time target: 38%

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Measured Move Up Identification Guidelines

CharacteristicDiscussion
TrendMeasured moves are reversal patterns so look for a downward price trend leading to the measured move.
First legUsually begins from a new low. Prices rise rapidly in a straight-line affair. Avoid rises that curve.
Corrective phasePrices retrace between 38% and 62% of the first leg move. If the retrace carries price below the bottom of the first leg, avoid the measured move.
ProportionalThe corrective phase should look proportional to the first leg. Be suspect of retraces larger than 62%.
Second legThe slope of the first leg often matches the slope of the second leg although the two are separated by the corrective phase. Both legs often fit in channels.
Volume trendTrends downward 61% of the time, and is dome shaped 62% of the time.
AvoidDon't trade measured moves that appear as horizontal, saw tooth patterns or those that spring from a flat base.

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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.
CompletionAfter a measured move completes, price remains above the corrective phase 19% of the time, 35% stop declining within the corrective phase, 31% stop below the corrective phase but above the measured move's low, and 15% drop below the measured move low.
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.
VolumePatterns with U-shaped volume reach their price targets more often than do those with dome-shaped volume.
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.

-- Thomas Bulkowski

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Other Measured Move Up Examples

See Also

Copyright © 2005-2013 by Thomas N. Bulkowski. All rights reserved. Sped up my computer; ran it on 220 volts. Works greO$%?