Constructing price objectives from measured moves and swings

A constructed watch zone

A price objective is treated as more noteworthy when more than one independent projection method lands on the same area.

An objective built from pattern height is a supplement to trend analysis. Read it as a minimum-objective rather than a precise destination, because the trend may continue past it.

Copy the measured-move height

A measured-move copies a pattern’s vertical span or a prior swing’s length from a breakout or reaction point and treats the result as a minimum-objective.

A measured-move target from a head-and-shoulders top is built by taking the vertical distance from the head to the neckline and subtracting that distance from the neckline. The neckline joins the two shoulder extremes, and a move through it starts the measured-move count. The result is a guideline that price may exceed.

A triangle measured move is constructed by taking the formation’s maximum width and projecting that distance from the breakout, typically after volume has contracted while price remains inside the triangle.

Check the support-resistance shelf

Support is the area where a decline stops and then either trades sideways or turns up. Resistance is the complementary area where an advance stops and then either trades sideways or turns down.

In a consolidation, the lower boundary is described as often falling in a retracement-band of 35% to 65% of the larger trend and near support from a prior minor range. The noteworthy objective on the upper side is the previous extreme high.

A 10-day simple moving average can be used as a constructed retracement objective. A turn up near prior lows can confirm a rally, and a rising average can mark support for later pullbacks.

Project the swing-chart repeat

A swing-chart objective is constructed by measuring the first impulsive swing and projecting a similar distance from the subsequent extreme, on the idea that the later price cycle will approximately repeat the earlier one.

The so-called 50% retracement is described as a theoretical midpoint of a correction that can in practice fall anywhere from 35% to 65% of the prior move. That span is the retracement-band used when a correction is placed on the same chart as the swing projection.

Stack the three constructions

Swing measurements and support-resistance shelves can be stacked on the same chart so that equal-length legs are checked against previously established demand and supply areas.

Editorial: when the measured-move copy, the shelf, and the swing-chart repeat occupy one band, treat that band as a working bound to watch. It remains a minimum-objective until later price either stalls there or continues through it.