Discussion in 'Strategy Development' started by Spectre2007, Jun 19, 2008.
anyone care to explain graphically this concept?....
1) In my opinion, it has to do with trading ranges that establish the next upside & downside target upon the breakout from the established range. Imagine a market that has been trading in a range several times from 650 to 700. It has a range, also known as a "measure", of 50. On an upside breakout above 700, you expect the market to make a "measured move" up to 750, i.e. 700+50. On a downside breakout below 650, you expect the market to make a "measured move" down to 600, i.e. 650-50. The range defines the magnitude of the expected breakout.
2) Some people believe that it has to do with retracements that tend to repeat themselves in a trend. For example, a market rallies 5, falls 2, rallies 4, falls 2, rallies 6, falls 2, rallies 3, falls 2. The fall of 2 is the "measured move" that seems to repeat in the trend. The more times it repeats, the more traders get excited about it and make it a self-fulfilling prophecy.
I've always understood a measured move to mean a projected move out of either a range
http://charts.dacharts.com/2008-06-19/2008-06-19 16-34 YM #F D.png
Came to within 18 ticks or 0.14% of the projection.
or a 1-2-3 pattern with a higher low or lower high.
http://charts.dacharts.com/2008-06-19/2008-06-19 16-39 NQ #F 10.png
Touched it almost exactly.
Notice in both cases I used the open/close rather than the absolute highs/lows.
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