Ideally, the decline is fairly orderly and lengthy with a series of declining peaks and troughs that may form a price channel . Less erratic declines are satisfactory, but run the risk of turning into a different pattern. Generally speaking, the bigger the decline is, the bigger the reaction rally. Some retracement formations might include an upward sloping flag or rising wedge . If the formation turns out to be a consolidation, then a continuation pattern such as a rectangle or descending triangle could form.
Some technicians like to measure by points, others in percentage terms.
Deciding which method to use will depend on the individual security and your analysis preferences. However, if there is no readily identifiable pattern, then some other signal must be sought. In this case, much will depend on your trading preferences, objectives, risk tolerance and time horizon. Another method might be to look for a break below the reaction low set by the first decline as confirmation of continuation. Move pattern would be confirmed.