Measured Pattern Move (Bulkowski) [SS]

Hey everyone,

This is the Measured Pattern Move using Bulkowski's process for measured move calculation.

What the indicator does:

The indicator has the associated measured move across 20 of the most common and frequent Bulkowski patterns, including:

• Double Bottom / Adam Eve Bottom
  
• Double Top / Adam Eve Top
  
• Inverse Head and Shoulders
  
• Bear Flag
  
• Bull Flag
  
• Horn Bottom
  
• Horon Top
  
• Broadening Top
  
• Descending Broadening Wedge
  
• Broadening Bottoms
  
• Broadening Tops
  
• Cup and Handle
  
• Inverted cup and handle
  
• Diamond Bottom
  
• Diamond Top
  
• Falling Wedge
  
• Rising Wedge
  
• Pipe Bottom
  
• Pipe Top
  
• Head and Shoulders
  

It will calculate the measured move according to the Bulkowski process.

What is the Bulkowski Process?

Each move has an associated continuation percentage, which Bulkowski has studied, analyzed and concluded statistically.
For example, Double tops have a continuation percent of 54%. Bear flags, 47%. These are "constants" that are associated with the pattern.

Bulkowski applies them to the daily, but how I have formulated this, it can be used on all timeframes, and with the constant, it will correctly calculate the measured move of the pattern.

What this indicator DOES NOT DO
This indicator will not identify the pattern for you.
I tried this using Dynamic Time Warping (DTW) using my own pre-trained Bulkowski model in R. I was successfully able to get Pinescript to calculate DTW which was amazing! But applying it to all these patterns actually went over the execution time limit, which is understandable.

As such, you will need to identify the pattern yourself, then use this indicator to hilight the pattern and it will calculate the measured move based on the constant and the pattern range.

Let's look at some examples:

Use examples

Double bottom / adam eve bottom on SPY on the 1-Minute chart


Adam and Eve Double Bottom QQQ 1-Hour Chart


Adam Eve Double Bottom MSFT Daily Chart


Bearish Head and Shoulders Pattern MSFT Daily



You get the point.


How to use the indicator

To use the indicator, identify the pattern of interest to you.
Then, highlight the pattern using the indicator (it will ask you to select start time of the pattern and end time of the pattern). The indicator will then highlight the pattern and calculate the measured move, as seen in the examples above.

Best approaches

To make the most of the indicator, its best to draw out your pattern and wait for an actual break, the point of the break is usually the end of the pattern formation.
From here, you will then apply this indicator to calculate the expected up or down move.

Let me show you an example:



Here we see ES1! has made an Adam bottom pattern. We know the Eve should be forming soon and it indeed does:



We mark the top of the pattern like so:



Then we use our Measured move indicator to calculate the measured move:



Measured move here for ES1! is 6,510.

Now let's see....



Voila!


Selecting the Pattern

After you highlight the selected pattern, in the indicator settings, simply select the type of pattern it is, for example "head and shoulders" or "Broadening wedge", etc.
The indicator will then adjust its measurements to the appropriate constant and direction.


Concluding remarks

That is the indicator!
It is helpful for determining the actual projected move of a pattern on breakout.
Remember, it does not find the pattern for you, you are responsible for identifying the pattern. But this will calculate the actual TP of the pattern for you, without you having to do your own calculations.

I hope you find it useful, I actually use this indicator every day, especially on the lower timeframes!

And you will find, the more you use it, the better you get at recognizing significant patterns!

If you are not aware of these patterns, Bulkowski lists all of this information freely accessible on his website. I cannot link it here but you can just Google him and he has graciously made his information public and free!


That's it, I hope you enjoy and safe trades!


Disclaimer
This is not my intellectual property. The pattern calculations come from the work of Thomas Bulkowski and not myself. I simply coded this into an indicator using his publicly accessible information.
You can get more information from Bulkowski's official website about his work and patterns.