Avoid the Barbed Wire Trap
Recognising and Steering Clear of Barbed Wire Patterns
Al Brooks mentioned the barbed wire candlestick pattern in his Trading Price Action Reversals Book. (You can hear my conversation with Al here.)
In the book, Al defines a barbed wire pattern as this:
“A trading range of three or more bars that largely overlap and one or more is a doji. It is a type of tight trading range with prominent tails and often relatively large bars”
And what do we know about barbed wire ladies and gents?
We don’t touch it…
It’s there to keep us away from something.
The same goes for price – barbed wire is telling us to stay away!
Chop and slop, dirty candles, a sh1t show… Whatever term you like to use.
This is supply and demand equilibrium and we need to let it play out first…
After all, our edge as traders is to capitalise on supply vs demand imbalances, not guess where the market will go…
Now, of course, barbed wire could occur after a big move, say in a flag or consolidation. And yeah maybe you are stalking a trade, but IMO it’s far better to wait for either
- A fake out/pin bar
- An ignition candle
Otherwise, you end up sitting there amongst that barbed wire, watching price oscillate around your entry, unrealised P&L changing like a traffic light, wearing you down.
Something to watch out for today…