A measured move projects a pattern's height from its breakout point to estimate a target. For a head and shoulders, measure from the head to the neckline and project that distance down from the break. For a rectangle or triangle, measure the widest part and project it from the break. The target matters because it converts a setup into a risk-reward ratio that can be judged before entry.
A measured move projects a pattern’s height from its breakout point. It is the standard way to turn a chart pattern into a number.
Its real function is not prediction. It is that a target existing before entry makes the risk-reward ratio computable — and a trade whose ratio cannot be computed before entry cannot be judged.
The method
Head and shoulders. Measure vertically from the head to the neckline. Project that distance downward from the point where price broke the neckline.
Double top or bottom. Measure from the peaks to the trough. Project from the break.
Rectangle. Measure the height of the range. Project from the break.
Triangle. Measure the widest part — the base — and project from the break.
In every case the logic is the same: the pattern’s own dimensions estimate the energy stored inside it. A tall pattern took a large range to build and projects a large move; a small one projects a small one.
Where projections break down
A structural level in the path. If the projection requires price to pass through a well-established support level, you are assuming that level fails — a second assumption stacked on the first. The honest target is the level, not the projection.
Overextended patterns. A pattern that forms after an enormous move has less room ahead of it than one forming at the start of a trend.
Thin liquidity. Projections assume orderly movement. Around scheduled news or weekend gaps, price can overshoot or undershoot dramatically.
The practical rule: take the nearer of the measured move and the next major structural level. Being conservative on targets costs some upside; being optimistic costs entire trades that reached 80% of a projection and reversed.
The decision the target enables
Here is where measuring earns its place. Suppose a double top gives:
- Entry on the break: 1.0850
- Stop above the second peak: 1.0895 — 45 pips of risk
- Measured target: 1.0770 — 80 pips of reward
That is a ratio of roughly 1:1.8. Whether that is acceptable depends on your win rate, per the table in risk-reward ratio — but the point is that you can decide before entering.
Now change one input. If a strong support level sits at 1.0820, the realistic target is 30 pips against 45 of risk: a ratio below 1:1. Same pattern, same entry, and now a trade worth skipping.
Key takeaway The measured move’s job is to let you say no. A setup that looks excellent but projects a poor ratio is a setup to pass on — and passing is only possible if the target was calculated before the entry rather than after.
Managing toward it
Take it in full. Simple, mechanical, easy to follow. Gives up the occasional large runner.
Partial at the target, trail the rest. Banks the estimate and keeps exposure to a bigger move. Costs a lower average exit on the trades that would have run furthest.
Trail from the start. Captures large moves best, gives back more on the ones that stall near target.
None dominates. What matters is choosing one in advance and applying it consistently, so that your journal — in R-multiples — measures a single method rather than a mix of improvisations.
Next: Moving averages — the first of the five indicator parts.
- A measured move projects the pattern's own height from the breakout point.
- Targets must be set before entry, since their purpose is to judge whether the trade is worth taking.
- A projection that lands beyond a major structural level is unlikely to be reached in full.
- If the measured move gives a poor risk-reward ratio, the correct response is to skip the trade.