Friday, July 15, 2011

BW midrange

A mid-range barb wire (BW) pattern is a very common occurrence on Trading Range days. Most traders get chopped up trying to trade these such as the ones between b22-29 and b41-53 today.

Facts you need to know about barb wire:

  1. They almost always break away from the ema rather than thru the ema.
  2. A strong breakout bar from BW(b31,54), no matter how strong it may appear, is likely to fail and turn around to go through the BW. This is especially true on trading range days since you expect moves to ends of the range to reverse.
  3. 2 failed attempts to break through the ema(b25,27) can be traded as if it were a minor A2 if additional indications are seen (TL touch, 5tf, shaved signal bar b28). This should be done with care since taking the fBO is always the better trade and you dont want to miss it by being on the wrong side.
  4. A BW fBO late in the day is likely to give a much stronger move than one mid-day.

Note that hard H1/L1 entries in a hard trend (b74,b78) do not constitute BW. This is because trending dojis are a trend and BW needs to be somewhat horizontal.


  1. HI Cad,

    Couple of questions.

    How come B2 is not the first reversal?

    Bar 25 is a 5 tick failure, because people went short 1 tick below B26 and it never made 5 ticks?

    Thanks for the blog. I am learning a lot from it!

  2. B2 possibly is a first reversal as well but it is more likely to act as a fBO of prior day's swing point.

    Price went only 5t below b24, which meant a lot of shorts could not scalp out and would be stopped out. Their buys would add upward pressure to the breakout.