1 and 2. Anything above 60% should be seen as a good ratio for breakout.
Just like how a single musical note in itself may not convey much, similarly in technical analysis as well follow up candles play an equally important role to decide the genuineness of the breakout.
There are many trading systems whose idea is never to buy the initial breakout but take the entry when the stock retreats or retraces back to its support and resistance levels and take the entry if it sustains then.
This has been my observation so far. Would be great to see other’s views on this topic as well
Btw , what do you think about it? What is a good percentage according to you @Gaurang_Pant
As we all know, a candle is made through the contributions of buyers and sellers. In cases where a candle forms, 20% of the wick-to-body has a higher probability of continuing on the break side because the submissive players needs to work a little hard to dominate that area. But it can go the other way if this happens in a supply zone area.
I also think that it varies from system to system; some might get a good win percentage with 60% or 80%, and others might not. But as an observer, somewhere between 75 and 85 is a good number to look for.
I Do not know about the ratio (I do not use this). Maybe you can use a ratio like 60% or above as a rule to filter out the trades.
A more effective way will be to analyze the strength of the breakout in the lower time frame.
Example:
a) Daily breakout with wick but in the hourly time frame that wick is just a bunch of small reds with some bullish pressure (Here even if the wick size is more than 50% that does not mean the breakout is weak)
b) Weekly breakout with small wick and in hourly time frame there is bearish pressure build-up. (break out my fail). Here we can wait for the bearish pressure to get absorbed by bulls before any entry.
STRONG CANDLE WITH NO WICK DOES NOT MEAN IT IS STRONG.
IT DEPENDS ON LOCATION, FOLLOW-THROUGH, LOWER TIME FRAME STRENGTH.