Retracement Bar

🔍 Retracement Bar – RB
The Retracement Bar (RB) indicator is designed to highlight potential reversal zones by identifying candles where price shows a clear rejection from the extremes. It helps traders spot moments where institutional inventory rebalancing may be occurring — often a precursor to a strong move in the opposite direction.

RB highlights bars that:

Have a relatively small real body compared to the total candle range.

Show a long wick (upper or lower) that exceeds a user-defined percentage of the candle range.

Suggest a potential rejection of price — upward or downward — based on candle structure.

When these conditions are met, a triangle symbol is plotted:

🔻 Red triangle above a candle suggests a possible short opportunity.

🔺 Green triangle below a candle suggests a possible long opportunity.

This indicator does not repaint and triggers only at candle close.

📈 Example – Long Entry
Signal: A green triangle appears below a candle (suggesting rejection of lower prices).

Steps:

Wait for the current RB candle to close.

On the next candle:

Enter long if price breaks above the high of the RB candle.

Alternatively, wait for a pullback and enter based on confirmation (e.g., bullish engulfing, hammer, trendline bounce).

Place a stop-loss just below the low of the RB candle.

Set a target:

Based on a 2:1 risk-reward ratio.

Or use the next resistance/Fibonacci level.

📉 Example – Short Entry
Signal: A red triangle appears above a candle (suggesting rejection of higher prices).

Steps:

Wait for the current RB candle to close.

On the next candle:

Enter short if price breaks below the low of the RB candle.

Or wait for confirmation (e.g., bearish engulfing, shooting star, breakdown from a level).

Place a stop-loss just above the high of the RB candle.

Set a target:

2:1 risk-reward ratio.

Or the next support/Fibonacci zone.

✅ Recommended Filters for Better Results:
Confluence with support/resistance zones.

Trend alignment or reversal context.

Additional confirmation from price action patterns or oscillators.

Volume analysis for entry strength.

🙏 Acknowledgment
Special thanks to Rob Hoffman for inspiring this concept through his original Inventory Retracement Bar (IRB) idea — this indicator is a reinterpretation meant to visually and practically support discretionary price action traders.