What it is
The Measured Move Down is a bearish continuation pattern consisting of an initial decline (first leg), a corrective bounce, and a second decline (second leg) approximately equal in length to the first.
This is the bearish ABC move — one of the most reliable ways to project downside targets. When the first leg of a selloff is defined, you can estimate where the second leg will end.
The pattern reflects how fear works in waves. Panic, relief, then panic again — with each wave often covering similar ground.
The psychology
The first leg is the initial shock. Whether triggered by news, earnings, or technical breakdown, the selling is sharp and decisive.
The corrective bounce gives trapped holders false hope. Short sellers take profits, and dip-buyers step in. But the rally is weak — it's a dead cat bounce within a measured decline.
The second leg resumes as the bounce fails. Dip-buyers become forced sellers, adding fuel to the decline. The measured symmetry appears because the same selling pressure and fear dynamics that drove leg one replicate in leg two.
Identification
- 01Clear first leg decline — Defined impulse selling
- 02Corrective bounce — Retraces portion of leg one
- 03Second leg begins — Decline resumes from bounce high
- 04Approximate symmetry — Second leg approaches first leg's length
- 01Bounce holds 38.2–50% retracement — Typical bear bounce
- 02Low volume on bounce — No real buying conviction
- 03Second leg accelerates — Panic selling returns
- 04Clean swing points — Easy to measure
- 01Bounce exceeds 78.6% of first leg — Likely reversing
- 02No clear impulse in first leg — Choppy decline doesn't qualify
- 03Strong volume on bounce — Legitimate buying, not a dead cat
- 04Fundamental catalyst resolved — Reason for selling gone
Execution framework
Short at the bounce high when reversal signals appear. Project the first leg's length downward from the bounce high.
Above the bounce high. If price exceeds this, the measured move is invalidated.
Measure the first leg's length (high to low) and subtract it from the bounce high. This is your measured move target.
Entering at the 50% bounce typically gives 1:2 to 1:3.
Context matters
Measured moves down are essential for setting short targets and identifying where declines might find support.
- 01Sharp first leg with panic volume
- 02Weak bounce on declining volume
- 03Higher timeframe trend is bearish
- 04No fundamental resolution to the selling catalyst
- 01Strong bounce with real volume
- 02First leg was choppy and unclear
- 03Bullish divergence on the bounce
- 04Key support level between legs
In crypto crashes, measured moves down are your best friend for setting buy orders. Measure leg one, project from the bounce, and place bids at the target.
Compare the full pattern set
Use the library to compare similar structures before deciding what the chart is actually building.