“Defending the line” (below) shows a sequence on an intraday heating oil chart. Starting on the left side, which is the breakout bar, whenever a larger-than-average bullish bar tries to break higher, it is met with resistance. In each case, the push higher is rejected before the move commences.
Does it make good sense to buy the bullish spike? Or is it a better strategy to wait and see if the bar is defended? Waiting for confirmation is not easy. It requires patience and asks the trader possibly to abandon a profitable outcome. The train could leave the station without us. Nevertheless, the greater likelihood is the level will be defended. Of course, there will be missed breakouts, but the best that traders can hope for is to manage uncertainty. With a wide-range power bar, even one sequence where a stop loss is triggered far from the entry point can hurt.
There are many applications of the wide-range power bar, but the recurring theme in all of them is not to treat it as trend confirmation. In financial markets, just when something looks obvious, it probably isn’t. Reliable opportunities to sell lows only materialize occasionally, but extremes develop because of power bars all the time. Exploiting this frequency can keep a trader in the black.