A worked example that explains the rule, not a stock price. The circle marks the first close beyond the level. The blue line is the target. The orange line is the invalidation. Prices are in the right-hand column, and sessions sit under the volume bar.Hollow green candles closed above their open, and filled red candles closed below it.
Numbers in the example chart
From the same calculation that draws the shape and writes the "Measuring the target" section below.
Trigger level
$50.4 · at the close of session 53
Target
55.2$
Invalidation
46.0$
Pattern height
9.2$
Chart span
70 sessions
What it is
A rising leg, then a pullback that retraces part of it, then a second leg roughly equal in length to the first.
The pattern assumes the market repeats the same rhythm: the pullback is a rest halfway, not the end. Anyone who missed the first leg finds a measuring point for the second in the pullback. It is also known as AB=CD when both legs are equal in price and time, and it appears inverted in a downtrend, read the same way.
First legA steady rise that sets the length of the move the second leg is measured against.
PullbackA retracement between one third and about two thirds while volume shrinks · a deeper pullback weakens the assumption.
ResumptionA close above the high B signals the trend is back.
Second legExtends toward the length of the first, measured from the low C · profit-taking is common near the target.
Recognition rules
A clear first leg from A to B with higher highs and higher lows.
The first leg starts from a clear low A after a range or a decline, so it marks the start of a new move, not part of an earlier one.
A pullback from B to C retraces between 30% and 62% of the first leg.
The two legs last about the same time, within a quarter of each other.
Volume shrinks in the pullback and returns with the second leg.
The pullback takes a known shape such as a flag or a short falling channel, and its low C is the measuring point.
Confirmation is a close above the high B.
Measuring the target
Measured Move (Measured Move): the length of the first leg is added to the end of the pullback. In the example the leg runs from $41.2 to $50.4, a length of $9.2, and the pullback ends at $46.0 ⇐ target at $55.2. Invalidation is a close below C.
Where it fools you
A pullback deeper than 62% of the first leg is a possible reversal, not a pause. Measuring both legs in dollars on a stock that has doubled inflates the target, so measure in percent.
Equality is approximate: the second leg is noticeably shorter or longer in most cases, so the target is a zone, not an exact number.
Measuring the second leg from the high B instead of the low C is a common mistake that raises the target by the whole pullback.
Volume separates a pullback from a pause: a pullback on rising volume may be the start of a reversal, not the middle of the move.
Open the daily timeframe for any symbol and draw the pattern yourself. Your drawing is saved per symbol in your browser, and the terminal does not name or detect the pattern.
━ Level
⇕ MeasureTarget equals pattern height
We do not detect chart patterns with a numeric rule: telling them apart takes judgment on the chart. Candlestick patterns with a numeric rule are detected daily by the candlestick pattern scanner.
The mirror image: the bearish Measured Move
The same pattern turned upside down, with the same rules in the opposite direction: what was a top becomes a bottom, and the trigger, target and invalidation all flip direction.
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