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Measured Moves: Using the Last Leg to Estimate the Next

A measured move assumes that markets often move in repeating legs of similar size. After an impulse, price pauses and then travels roughly the same distance again. The method is simple. Measure the first leg from its start to its end. Project the same distance from the end of the pause, in the same direction. The result is a rough target.

You see this logic inside other patterns. The flag target uses the pole's length. The double top target uses the height of the pattern. Triangles use the width. All are variations of measured moves.

It is an approximation, not a law. Markets sometimes stop short, extend beyond, or reverse entirely. A target gained from a measurement still needs a sanity check against structure: is there a major level in the way?

Its main strength is discipline. By projecting a target before entering, you can calculate risk-to-reward in advance and skip trades where the numbers do not work. If the stop is 30 pips and the measured target only 35, the trade may not be worth taking.

A common refinement is to take partial profit at the measured target and manage the remainder with a trailing stop.

Beware of asymmetry in different conditions. Volatility changes can make a second leg longer or shorter.

Practical step: find ten trend legs on your chart and check how often the second leg came within 20 percent of the first.

A caveat: measured moves are rough guides. If the first leg was 80 pips, the second might be 60 or 110. I use it as a sanity check on whether a target is realistic, not as an exact number to place a limit order at. It's more useful when combined with the daily range. If the first leg took 80 pips and the pair has already moved most of its average daily range, the second leg might have to wait until tomorrow. Also check what's in the way. If there's a clear level halfway to the measured target, price may stall there first. In that case I'd take a partial at the level and leave the rest for the full measured move.

I like measured moves for deciding if a trade is worth it. If the projected target is only 1R away from a sensible stop, the trade probably isn't worth taking, even if the setup looks good. That filter has saved me from a lot of trades that looked great on structure but had nowhere to go. Work it out before entry: measure the projected leg, subtract the spread, and divide by your stop distance. If that comes out below about 1.5, skip it or find a tighter entry on a lower timeframe. It turns a vague feeling about potential into a number you can check in ten seconds.