Patterns › ATR expansion up vs ATR expansion down
Look-alikes
ATR expansion up vs ATR expansion down
They look alike, so beginners mix them up. Here is what each one means, and how often each one worked on real charts.
ATR expansion up
After a very calm stretch, one big candle broke above the recent range. Calm often comes before a storm.
ATR, the average true range, is the average size of the last 14 candles, so it shows how wild or calm price has been. When ATR drops to one of its lowest levels in a long while, the market is quiet. An ATR expansion up is a sudden big green candle, at least twice the recent ATR, that closes above the highs of the last 10 candles. It shows energy returning with buyers in front, but the first burst does not always last.
Chasing the big candle when it closes far above the quiet range, where a normal pullback can reach a close stop.
ATR expansion down
After a very calm stretch, one big candle broke below the recent range. Calm often comes before a storm.
ATR is the average size of the last 14 candles, so a very low ATR means the market has been calm. An ATR expansion down is a sudden big red candle, at least twice the recent ATR, that closes below the lows of the last 10 candles. It shows energy returning with sellers in front. Like other breakouts, the first burst can be a fake.
Chasing the big red candle when it closes far below the quiet range, where a normal bounce can reach a close stop.
Real odds side by side
| Pattern | Found | Target first | Stop first | Went nowhere |
|---|---|---|---|---|
| ATR expansion up | 8,148 | 40% | 58% | 2% |
| ATR expansion down | 8,283 | 42% | 55% | 2% |
Counted by the Trading Class research engine on real past candles: entry at the signal candle's close, target 1.5 × ATR(14), stop 1 × ATR(14), 12 candles to decide, a candle that touches both counts as the stop. How we count. Past data, not a forecast and not advice.