Direct Answer
A measured move (also called an AB=CD pattern in its simplest form) is a three-leg price move: an initial directional move (leg A-B), a corrective pullback (leg B-C), and a second directional move (leg C-D) that is roughly equal in size to the first leg. Traders project the length of leg A-B forward from point C to estimate a potential target for leg C-D. It's a continuation-style projection technique, not a reversal signal.
Key Takeaways
- Three legs define the pattern: A-B (initial move), B-C (corrective pullback), and C-D (second move), not just any two-leg rally-then-pullback.
- The C-D leg is projected to be roughly equal in price length to the A-B leg, measured forward from point C.
- A measured move up is a rally, a pullback, then a second rally of similar size; a measured move down is the mirror image in a downtrend.
- It's a continuation technique that assumes the prevailing trend resumes after the B-C correction. It is not a reversal pattern.
- "Roughly equal" is an estimate, not a guarantee, leg C-D commonly falls short of, matches, or overshoots the projected target.
What Is a Measured Move Pattern?
A measured move describes a price structure that unfolds in three legs. First, an initial directional move establishes the pattern's scale. This is leg A-B. Second, price pulls back against that move in a corrective phase, leg B-C. Third, once the correction ends, price resumes in the original direction for a second leg, leg C-D, that traders expect to travel a distance similar to leg A-B.
In its simplest labeled form, this structure is called the AB=CD pattern: point A is where the first leg begins, point B is where it ends and the correction begins, point C is where the correction ends and the second leg begins, and point D is the projected endpoint of the second leg, sized to roughly equal the A-B distance. The two names refer to the same underlying structure, "measured move" describes it functionally, "AB=CD" labels it by its four points.
How a Measured Move Forms
Leg A-B: a clear directional run, a rally in a measured move up, a decline in a measured move down, that establishes the length traders will later project. Leg B-C: a corrective pullback against that move. Traders commonly use a rough rule of thumb that this pullback retraces somewhere around a third to half of leg A-B's distance, but this is not a fixed law, the actual retracement varies by market, timeframe, and the strength of the underlying move. Leg C-D: once the correction stalls at point C, price resumes in the original A-B direction. The projected target for point D is found by adding (in a measured move up) or subtracting (in a measured move down) the A-B distance from point C.
A measured move up consists of a rally (A-B), a pullback (B-C), then a second rally of similar magnitude (C-D). A measured move down is the mirror image in a downtrend: a decline (A-B), a corrective bounce (B-C), then a second decline of similar magnitude (C-D).
Measured Move vs. Related Continuation Concepts
| Concept | Structure | Signal type | Target method |
|---|---|---|---|
| Measured move (AB=CD) | Three legs: initial move, pullback, second move | Continuation | Project leg A-B's length forward from point C |
| High tight flag | Steep flagpole, tight consolidation flag, breakout | Continuation | Project the flagpole's length forward from the breakout |
| Bump-and-Run Reversal | Lead-in trend, accelerating bump, trendline-break run | Reversal | No fixed price projection, signals a trend change, not a target |
Trading a Measured Move
Because leg C-D is a projection, not a guarantee, most traders treat the A-B=C-D target as a reference level rather than an exact price to trade against. A common approach waits for confirmation that the B-C correction has actually ended, price resuming in the original direction and clearing the B-C correction's own extreme, before treating leg C-D as underway. The B-C correction low (in a measured move up) or high (in a measured move down) doubles as a natural stop-loss reference: if price closes back through it, the assumption that the correction has finished no longer holds, and the projected C-D target loses its basis. Position size can then be set from the distance to that level using standard risk-per-trade rules.
Measured Move Checklist
- Leg A-B is a clear, measurable directional move, not just background noise.
- Leg B-C is a genuine corrective pullback, not a full reversal of leg A-B.
- Point C is identified before projecting a target, not estimated after the fact.
- The projected C-D target is treated as a reference zone, not an exact price.
- A stop level (the B-C correction's extreme) is identified before entry, and position size matches the account's risk-per-trade limit given that distance.
A Projection Is an Expectation, Not a Destination
The measured move projects the length of a prior leg forward from a new starting point. That projection is a way of setting an expectation with a defined basis, which is more useful than an arbitrary target, and it carries no obligation for price to arrive there.
Use it to structure the trade rather than to define its ending. A projection that sits far beyond any nearby resistance is telling you the trade needs a lot to go right. One that sits just below a well-established level is telling you the target may not be reached before supply appears. Both readings are more actionable than the number itself.
The mistake is holding to the projection past evidence that the move has stalled. A target derived from geometry has no informational content about what participants are doing now, and price behaviour that deteriorates well before the projection is the more current information.
Which prior leg is measured is also a choice with no correct answer. Different swing selections produce different projections from the same chart, and a projection that appears precise is precise about an input that was selected by judgement.
Measured Move FAQs
What are the three legs of a measured move?
Leg A-B, the initial directional move; leg B-C, a corrective pullback against that move; and leg C-D, a second directional move in the same direction as leg A-B, roughly equal in size to it.
Is the measured move the same as the AB=CD pattern?
Yes, in its simplest form. The measured move is the general name for the three-leg structure; AB=CD names the same structure by its four labeled points and the rule that the C-D leg is roughly equal in length to the A-B leg.
How do you project a measured move target?
Measure the price length of leg A-B, then project that same length from point C (the end of the B-C correction) in the direction of the original move. That projected level is the estimated target for leg C-D.
Is a measured move a reversal signal?
No. It's a continuation-style projection technique. It assumes the prevailing trend resumes after the B-C pullback rather than signaling that the trend is reversing.
What invalidates a measured move setup?
A close back below the B-C correction low (in a measured move up) undoes the assumption that the correction has finished and the original trend is resuming, since the C-D leg no longer has a clean point C to project from.
How much retracement is expected in the B-C leg of a measured move?
Common descriptions expect the corrective leg to retrace between a third and two-thirds of the first leg, with deeper retracements weakening the structure. A B-C leg that retraces the entire A-B move eliminates the pattern, because there is no longer an intermediate structure to project from. The specific proportion matters less than whether the correction stayed clearly inside the first leg.
Does the measured move assume the two legs take the same amount of time?
Some versions of the pattern add a symmetry expectation in time as well as price, on the reasoning that a similar move should unfold over a similar period. Others treat only the price relationship as meaningful. Time symmetry is the weaker of the two claims and is best treated as a secondary observation, since a second leg that takes much longer than the first is common and does not by itself invalidate the projection.
What is the difference between a measured move and a simple price target?
A measured move derives the target from a structure already present on the chart, so the projection is a consequence of observed price behaviour rather than an independent forecast. A price target from valuation or from an indicator has a different basis entirely. The distinction matters because a measured move target is invalidated when the structure it was derived from breaks, which gives it a clear expiry that other targets lack.
Can measured moves be stacked to project further targets?
Practitioners sometimes project a second measured move from a new structure that forms after the first target is reached, which is a fresh projection rather than an extension. Chaining projections from the original structure, on the other hand, compounds an approximation and produces targets with little connection to current price behaviour. Each projection should rest on structure that currently exists on the chart.