Thrust Pullback and Measuring Move Analysis

Thrust Pullback and Measuring Move Analysis

In this article, I will discuss Thrust Pullback and Measuring Move Analysis in detail. Please read our previous article, where we discussed Advanced Price Action Analysis. As part of this article, I will discuss the following pointers in detail related to Thrust Pullback and Measuring Move Analysis.

  1. Thrust and Pullback Analysis
  2. Measuring Move
  3. Volume and Price Analysis
Thrust, Pullback, and Measuring Move Analysis

The strengthening or weakening of a trend may also be observed through the analysis of thrust and pullback and measured move.

THRUST Analysis

Thrust Refers to the distance between the current swing high and a previous swing high (in an uptrend) or swing low (in a downtrend). Increased thrust is a sign of potential trend strength. The shortening of Thrust is a sign of potential trend weakness.

Thrust, pullback and Measuring move Analysis

The increased thrust of T2, when compared with T1, indicates greater strength within the trend. Also compared with T3 to T2, indicating strength on the upside.

Thrust, pullback and Measuring move Analysis

Shortening of thrust, T2, when compared with T1, indicates weakness with the trend. T3 is then much shorter than T2, indicating weakness developing with the trend. T2 is unable to project to the same distance as T1 did. Something has shifted in the balance of supply and demand. The fact that the market could not do so indicates either a decrease in bullish pressure and/or an increase in bearish pressure.

The uptrend is showing signs of weakening

The uptrend is showing signs of weakening The uptrend is showing signs of weakening

ALL REVERSE FOR DOWNTREND

DEPTH OF Pullback

DEPTH Pullback refers to the distance with which a price retraces the previous up move or impulse move

DEPTH OF Pullback

Increased depth is a sign of the potential weakness of a trend. Decreased depth is a sign of the potential strength of a trend.

DEPTH OF Pullback

PULLBACK DP1 is the distance with which the pullback retraces IMPULSEMOVE IM1. DP2 is the depth with which the pullback retraces IM2. And DP3 is the depth with which the pullback retraces IME3

Note that

DP2 is a much smaller percentage of its IMPULSE MOVE IM2 when compared to DP1. D2 has a smaller depth than D1, indicating a potential weakening of the bears and, therefore, strength within the price trend.

DP4 is significantly larger than DP3, indicating potential strength within the bears and potential weakness within the price trend. The increased depth of pullback DP3 indicates increasing bearish pressure and a potential trend weakening.

The same concept applies to the downtrend.

MEASURING MOVE (relative strength of move)

Comparing impulse swing with the previous impulse swing in the same direction to find whether strength is increasing or decreasing or equal

Thrust Pullback and Measuring Move Analysis in Trading Thrust Pullback and Measuring Move Analysis in Trading Thrust Pullback and Measuring Move Analysis in Trading

Volume and Price Analysis

Before going forward, we have to identify a few terms:

Swing: A high or low where the price changes direction.

Leg: The distance between two swings

General Rules for Interpreting Volume to determine the health of a trend

1.) If the PRICE rises and VOLUME rises, the market is STRONGLY BULLISH.

Volume helps us to determine the health of a trend. An uptrend is strong and healthy if volume increases as the price moves with the trend and decreases when the price goes counter-trend (correction periods or ‘pullbacks’).

2.) If the price rises but VOLUME falls, the market is WEAKLY BULLISH.

When prices rise and volume decreases, it tells that a trend is unlikely to continue. Price may still attempt to rise at a lesser pace, and once sellers take control (which is usually signified by an increase in volume on a down bar or candle), prices will fall

3.) If the PRICE is falling, VOLUME is rising, and the market is STRONGLY BEARISH.

4.) If the PRICE and VOLUME are falling, the market is WEAKLY BEARISH.

Thrust Pullback and Measuring Move Analysis in Trading

Thrust Pullback and Measuring Move Analysis

Volume strength and weakness analysis

Volume is always analyzed by comparing; it can be to previous legs or swings. The reason for volume analysis is to look for increases or decreases compared to previous swings or legs to identify whether there is an increase or decrease in strength.

1) Compare the volume of the current price swing with the volume of the previous price swing in the same direction.

2) Compare the volume of the current price swing with the volume of the previous price swing in the opposite direction.

Compare the volume of the current price swing with the volume of the previous price swing in the same direction.

This means comparing the current impulse swing vs the previous impulse swing. What is it telling? Volume increasing or decreasing or the same volume.

Thrust Pullback and Measuring Move Analysis

LEFT SIDE image 1

Compare the volume of UP-swings (A) and (B). Note the decreased VOLUME of the leg (B), indicating a reduction in bullish VOLUME. Weakness is appearing on the bullish side.

When comparing the current up-leg B volume with the previous up-leg A volume. It shows volume decreasing. When prices are rising, and volume is decreasing, it tells that the trend is unlikely to continue. Price may still attempt to rise at a slower pace, and once sellers take control (which is usually signified by an increase in volume on a down bar or candle), prices will fall.

RIGHT SIDE IMAGE 2

When comparing the current up B leg volume with the previous up leg A volume. Note the increasing VOLUME on A legs, indicating an increase in BULLISH STRENGTH. BULLISH price swings are showing signs of strength

ALL CONCEPTS REVERSE FOR DOWNTREND

Thrust Pullback and Measuring Move Analysis

Compare the volume of the current price swing with the volume of the previous price swing in the opposite direction.

This means comparing impulse volume vs retrace volume. Generally, a healthy trend has increasing volume on impulse move and decreasing retrace volume.

Thrust Pullback and Measuring Move Analysis

LEFT SIDE IMAGE 1

When comparing the current up-leg B volume with the previous up-leg A volume. It shows volume decreasing. Strength is now clearly on the BEARISH side.

The price movement is expected in the direction of strength. When prices rise, and volume decreases, it tells traders that the trend is unlikely to continue. Price may still attempt to rise at a slower pace, and once sellers take control (which is usually signified by an increase in volume on a down bar or candle), prices will fall.

RIGHT SIDE IMAGE 2

When comparing the current up B leg volume with the previous up leg A volume, it shows that the price is rising and VOLUME is rising, which means BULLISH PRESSURE OVERCOME BEARISH PRESSURE. TREND CONTINUE IN UP DIRECTION

Thrust Pullback and Measuring Move Analysis

Thrust Pullback and Measuring Move Analysis in Trading Summary:

In trading, thrust pullback and measuring move analysis are part of the broader category of price action strategies. They are used to identify potential entry points and to estimate the possible extent of price movements. Here’s an overview of how these concepts are typically used in trading:

Thrust Pullback Analysis in Trading:

Thrust Pullback refers to identifying a strong directional move (the thrust) followed by a smaller counter move (the pullback). Here’s how to use this analysis:

  • Identify a Thrust: Look for a strong, impulsive price move that breaks through a significant level of support or resistance. This is your thrust.
  • Wait for the Pullback: After the thrust, the price will often retrace a portion of that move before continuing in the direction of the original thrust. This is the pullback.
  • Entry Points: Traders often look to enter a trade on the pullback, anticipating that the price will resume its initial direction after the retracement. The entry point is typically near key levels of support or resistance within the pullback zone.
  • Stop Loss Placement: A stop loss can be placed just beyond the pullback area or below a significant swing low (or high in the case of a downtrend) that formed during the pullback.
  • Volume Confirmation: Ideally, the thrust should be accompanied by high volume, while the pullback should occur on lower volume.
Measuring Move Analysis in Trading:

Measuring Move is a technique used to estimate the potential target of a price move based on prior patterns. Here’s how it’s applied:

  • Identify the Initial Move: Start by identifying a significant price move, which can be either upward or downward.
  • Determine the Retracement: After the initial move, the price will often retrace a portion of that move, forming a high or low that can be used as a reference point.
  • Project the Target: The expected target of the subsequent price move after the retracement can be estimated by measuring the distance of the initial move and projecting that distance from the retracement point.
  • Symmetry: The measuring move assumes that markets move somewhat symmetrically. If the first leg of a trend covers a certain distance, the next leg may cover a similar distance after a pullback or consolidation.
  • Confirmation: Look for confirmation from other indicators or patterns to validate the projected measuring move.
Combining Both Analyses:

Traders often combine thrust pullback and measuring move analysis to confirm trade signals:

  • The thrust indicates the potential start of a new trend.
  • The pullback provides a low-risk entry point.
  • The measuring move gives a logical price target for the trade.

It’s important to note that no method is foolproof, and these strategies should be used within the context of a comprehensive trading plan, complete with robust risk management rules. Stop losses, position sizing, and regular strategy performance review are essential to successful trading. Additionally, a trader’s ability to read the context of the market and adapt to changing conditions is key to effectively applying these analyses.

In the next article, I will discuss How to Trade with Smart Money. In this article, I try to explain the Thrust Pullback and Measuring Move Analysis in Trading. I hope you enjoy this Thrust Pullback and Measuring Move Analysis article. Please join my Telegram Channel, YouTube Channel, and Facebook Group to learn more and clear your doubts. 

26 thoughts on “Thrust Pullback and Measuring Move Analysis”

    1. You are also making spelling mistakes… so stop complaining and just focus on the value he is adding in to your knowledge

  1. Santosh D Ghate

    @Bikash : Can you please confirm any book on trading, please tell I want to learn options trading, thanks in advance

  2. Hello there. i didn’t get the last part of this. the one with the comparison of volume of current price swing with previous one in opposite direction. its the same explanation as above. Am I confused for something. please make me clear.

  3. English is just a language not intelligence. If it was a intelligence then all the Germans, French, Japanese would be poor. This is for trollers.

  4. Excellent work, this content is very precious for a trader. I appreciate hard work done by you for explaining each and every thing with chart example.

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