Everything in the Master Pattern starts with a box. If you can draw a contraction box correctly, the rest of the framework, the value line, the box tiers and the bias, falls into place. Here is the process.
Step 1: Find the Contraction
A contraction is a squeeze in price. The test is simple: a lower high and a higher low are forming at the same time. Each swing is smaller than the one before it, so the range is getting tighter.
The test
Lower highs and higher lows at the same time. If only one of those is true, it is not a contraction box.
Step 2: Draw the Box
Draw a rectangle around the squeeze, covering the bars where the range is tightening. The box marks the start of the three phase cycle.
Step 3: Wait for the Breakout
Do not act on the box alone. The contraction is the setup. The breakout is when the expansion phase begins. Price breaking out of the box, up or down, is what gives you the value line.
How to Draw Contraction Boxes and Expansion Lines (Master Pattern)
Step 4: Draw the Value Line
Once price has broken out, draw a line through the center of the box and extend it out to the right. That is the value line: the balance point between buyers and sellers from the contraction. Price tends to whip around it during expansion, and to return to it later.
Step 5: Classify the Box
Not every box deserves the same attention. Look at how many sides price has broken:
| Box type | Sides broken | What it means |
|---|---|---|
| Minor | 1 | A magnetic level. Price tends to return to it. |
| Major | 2 | A level you can base entries and exits on. |
| Origin | 3 or more | Marks the start of the cycle. A strong key level. |
Common Mistakes
- →Drawing a box when only a higher low or only a lower high is present.
- →Treating the first breakout as confirmation. Check how many sides have broken.
- →Ignoring the timeframe. A box on a higher timeframe carries more weight than one on a lower timeframe.
- →Trading every box the same instead of classifying it first.
Automating It on TradingView
Drawing boxes by hand across several timeframes is slow. Indicator X draws the contraction box, extends the value line from its center after the breakout, and tiers the box as Minor, Major or Origin, on any timeframe you choose.
Let The Chart Draw The Boxes
Indicator X marks every contraction box and tiers it as Minor, Major or Origin, with the value line drawn for you. 7-day free trial.
Try Indicator X FreeWhat is a contraction box?
A box drawn around a squeeze in price where a lower high and a higher low form at the same time.
When do I draw the value line?
After price breaks out of the box. Draw it through the center of the box and extend it to the right.