retracement of large candles - true or myth

hello friends
i was asking myself about the fact of the 30 % retracement of 4hr candles
that is larger than 200 % ATR
sometimes it happens
sometimes not
sometimes only 20% or less
so ...

is it a true or a MYTH ??
in other hand
would u take it as an entrypoint if it saticfies your trading system or not ??

Well.....

Indeed when a candle spikes a lot more then the ATR, especially at higher TFs, it's common see a retrace. How much? How often? Really good questions...

IMO those retraces are due to TP/SL been hit, since ATR is a well known tool to calculate those parameters.

One thing related to it that I could say is that, when you plot Bollinger Bands set to 3 standard deviations, price closes outside the bands about 1% of the times (4H TF)... I use this sometimes to do a small counter-trend scalp....

Sorry, couldn't help much....

thnx for ur post

but what did u meant by

price closes outside the bands about 1% of the times (4H TF)

u means candle closes outside the band with 1% of itself ?

Nope...

I meant that using BB (period = 20, Std Deviation = 3), IF you see, on 4H, the price OUTSIDE the BBs, it's a good (risky too) time to do some counter-trend scalp, cause that price will CLOSE OUTSIDE the BB only about 1% of the times.... so you have a huge chance that price will come back INSIDE the BB....

In fact, in hindsight looks nice but catch it when it's happening is not so clear...

very very nice
and helpfull to me and other peoples too

thnx " house trader "
for sharing

Quantative edge number 312. It's a myth.