Measured Move Down

The Measured Move Down is the bearish counterpart to Measured Move Up, also unfolding in three phases:

• First Impulse (Leg A): A steep price decline on strong volume.
• Correction (Leg B): A countertrend rally or sideways consolidation, retracing 38–62% of Leg A. Volume shrinks.
• Second Impulse (Leg C): A renewed decline, often mirroring or exceeding Leg A’s length, with volume expansion.

Like its bullish version, the second impulse often travels a distance similar to the first.

The measured move down reflects trend continuation after a pause:

• Leg A: Panic selling, bad news, or trend acceleration drives prices lower.
• Leg B: Shorts cover profits, and bargain hunters attempt to buy, causing a bounce. Confidence temporarily returns.
• Leg C: Sellers reassert dominance, taking advantage of higher prices to sell or short again. Buyers who hoped for reversal get trapped, accelerating the next wave down.

The symmetry comes from repeated emotional cycles: panic → relief → renewed panic.

Bulkowski’s data shows measured move downs are slightly more reliable than measured move ups:

• Continuation odds: ~73%.
• Failure rate: ~15%.
• Average decline after breakout: ~40%.
• Symmetry: Leg C equals ~92% of Leg A’s length on average.
• Duration: Corrections (Leg B) often last 1/3–1/2 as long as impulses.

The pattern is especially common in bear markets and downtrends with strong news catalysts.

Entry:

• Conservative: Short on breakdown from Leg B consolidation.
• Aggressive: Enter during countertrend rally near resistance.

Stop loss: Above Leg B’s high (conservative) or above breakout point (aggressive).

Targets: Minimum = length of Leg A projected downward. Secondary = major support zones.

Invalidation: Failure occurs if price rallies above the start of Leg A.

• Shallow corrections: Weak countertrend rallies may not provide good short entries.
• Deep corrections: >62% retracement can flip setup into reversal, not continuation.
• Volume confirmation: Needed on breakdown from Leg B.
• Overextension: After parabolic drops, measured moves may overshoot Leg A significantly.
• Retests: False breakdowns are common; waiting for confirmation reduces whipsaws.

• If Leg A lacks strong momentum (choppy or sideways decline).
• If correction retraces too deeply.
• If overall market sentiment flips bullish, undermining continuation odds.
• If volume signature does not align (no contraction in B, no expansion in C).