# Measure Rule Also known as: pattern objective. A Chart & Candlestick Patterns concept (Pattern mechanics) in the LuxAlgo Library. ## What is the Measure Rule? The measure rule is the charting convention that a pattern projects a price objective equal to its own height. Measure the pattern's depth, from its extreme to the boundary price must break, then project that distance from the breakout point in the direction of the break. A rectangle's height is added to the top of the range, a head and shoulders projects the head-to-neckline distance from the neckline, and a flag projects the flagpole from the breakout, the so-called measured move. The logic is proportionality: the energy stored in a pattern is assumed to scale with its size. The convention is as old as Western pattern work. Richard Schabacker's 1930s texts and Edwards and Magee's Technical Analysis of Stock Trends (1948) attached measuring implications to triangles, rectangles, and head-and-shoulders formations, and point-and-figure charting developed its own vertical and horizontal counts from the same intuition. The modern empirical layer comes from Thomas Bulkowski, whose Encyclopedia of Chart Patterns tabulated, pattern by pattern, how often U.S. stocks actually reached the measured objective, replacing folklore with base rates. Each structure has its own measuring convention. A [double top or bottom](https://www.luxalgo.com/library/concept/double-top-bottom/) projects the distance between the extremes and the confirmation line from the breakout. An [ascending, descending, or symmetrical triangle](https://www.luxalgo.com/library/concept/ascending-descending-symmetrical-triangle/) is usually measured at its widest point, with a second convention projecting a line parallel to one boundary from the pattern's start. A [rising or falling wedge](https://www.luxalgo.com/library/concept/rising-falling-wedge/) is often assigned a retracement objective, a return to the wedge's origin, rather than a height projection. Swing traders apply the same idea between patterns as the measured move, projecting the length of the prior impulse from the end of a pullback. It is a guideline, not a law. Pattern researchers, notably Bulkowski, documented that price reaches the full objective only part of the time, with rates varying by pattern, direction, and market. Practical use reflects that: some traders halve the height for a conservative objective, scale out into the full one, and always check whether the projection lands beyond obvious support or resistance. Documented pattern failure statistics are the honest companion to the rule. ## How to apply the measure rule on a chart The rule is a measurement procedure, so applying it is a repeatable sequence rather than a pattern hunt. 1. Define the boundary price must break (a neckline, range edge, or trendline) and the pattern's opposite extreme. 2. Measure the vertical height between them in price; for flags and pennants measure the preceding pole instead. 3. Wait for a confirmed break: a decisive close beyond the boundary, ideally on a [wide-range bar](https://www.luxalgo.com/library/concept/wide-range-bar/) or [engulfing bar](https://www.luxalgo.com/library/concept/engulfing-bar/) rather than a marginal poke. 4. Project the height from the breakout price in the direction of the break, and mark the half-height level as the conservative objective. 5. Audit the path: a target parked beyond major support or resistance deserves less confidence than one with clear air. ## How traders use it - As a profit-target generator after a confirmed breakout: the projected objective becomes the first scale-out or the take-profit anchor in a broader target plan. - As a trade filter before entry: if the measured objective sits behind a major level, or offers poor reward relative to the stop, the setup is skipped even when the pattern is clean. - As an expectation-setting tool: comparing how far price actually travels against the objective helps judge whether a breakout is on track, stalling early, or extending beyond the pattern's implied energy. - As a management scaffold: half the height as a first scale, the full objective as the second, with the stop sized against the same geometry so reward-to-risk is computed consistently. - As one vote among target methods: when the measured objective lands near a [gap fill](https://www.luxalgo.com/library/concept/gap-fill/) level or a prior swing extreme, the agreement strengthens the target zone; when methods disagree widely, position for the nearer one. ## Measure rule objectives vs other target logic - **Gap Fill** (https://www.luxalgo.com/library/concept/gap-fill/): A gap-fill target points at an existing reference, the unfilled gap, so it has a defined terminus; the measure rule extrapolates into territory the pattern never traded. Magnet targets tend to be nearer and better defined. - **Double Top/bottom** (https://www.luxalgo.com/library/concept/double-top-bottom/): The pattern supplies the height; the measure rule is the convention that turns that height into an objective, projected from the confirmation line. Published studies report full-target hit rates well short of certainty for these patterns, which is why halved objectives are common practice. - **Candlestick Patterns** (https://www.luxalgo.com/library/concept/candlestick-patterns/): Candlestick patterns are one- to three-bar events with no internal height worth projecting, so the measure rule generally does not apply. Objectives there come from surrounding structure rather than pattern geometry. ## FAQ ### How do you calculate a measured move target? Take the pattern's height: the vertical distance from its deepest extreme to the breakout boundary, whether that is a neckline, a range edge, or a trendline. Project that same distance from the breakout price in the direction of the break. For flag and pennant measured moves, the height used is the flagpole, the impulse that preceded the pattern, projected from the point where price exits the consolidation. ### Do measure rule targets always get hit? No. Published pattern studies show full objectives are reached only part of the time, and the rate differs across patterns and market conditions. That is why common practice treats the objective as a scenario: scale out partway, use half the height as a conservative target, and give priority to real support and resistance sitting in front of the projection. ### How do you measure a triangle's target? Take the height at the triangle's widest part and project it from the breakout point. An alternative convention draws a line parallel to the opposite boundary from the pattern's origin and reads the target where price meets it. Wedges are handled differently: they are commonly assigned a retracement to their origin rather than a height projection. ### What is the difference between the measure rule and a measured move? The measure rule is the umbrella convention that a pattern projects its own height. A measured move is one specific application: projecting the length of a prior impulse from the end of a consolidation or pullback, as in flag targets. In practice the terms overlap, with measured move usually reserved for swing-to-swing projections. ### Should targets be measured in points or percent? For short patterns on intraday or daily charts the difference is trivial and points are standard. Across large percentage moves point projections distort, so measuring percentage height on a log-scaled chart is the more consistent choice. Whichever you pick, apply it consistently. ### Can the measure rule be used for stop placement? Indirectly. The rule sizes the reward side; the stop still belongs at the price that proves the pattern failed, typically inside or beyond the pattern boundary. Comparing the objective with that stop distance gives the reward-to-risk number used to accept or skip the setup. ## Related concepts - Volume Signature per Pattern: https://www.luxalgo.com/library/concept/volume-signature-per-pattern/ - Breakout Confirmation: https://www.luxalgo.com/library/concept/breakout-confirmation/ - Pattern Failure Statistics: https://www.luxalgo.com/library/concept/pattern-failure-statistics/ --- Source: https://www.luxalgo.com/library/concept/measure-rule/ (LuxAlgo Library, the encyclopedia of trading & technical analysis). Free to use with attribution: https://www.luxalgo.com/library/license/