I believe that the hips have to go below the top of the knees. A correctly done squat "is deep, with hips dropping below level with the top of the patellas." (Starting Strength, chapter 2, Kindle Location 412). I had to look up a patella. It's a kneecap.
I was also doing squats incorrectly. I re-read chapter two after reading Rip's post.
It's unclear to me whether the figure squatting on the left in figure 2-8 is squatting deeply enough. It appeared to me that you squatted that deeply.
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