Measured moves in stocks are found within trends and are price projections for continuation patterns. A measured move is the distance from a reaction extreme to the next price target. The premise of a measured move is that prices will move in equal increments. This basis for setting price targets in technical analysis is used with chart patterns such as flag patterns and pennant patterns.
For example, a measured move as applied to the breakout from a bull flag pattern would take the length of the flagpole and add it to the low of the flag as an upside price projection. Measured moves are only necessary when chart patterns confirm, which would mean an upside breakout in this example from the bull flag pattern.
The measured move often helps to gauge what levels price may reach when trading continuation patterns. Measured moves are beneficial when anticipating profit objectives and price levels where to exit a trade.
We point out measured move candidates to members of our stock pick service on a regular basis. Come trade with us!