What is Marubozu Candlestick Pattern?
The Marubozu Candlestick Pattern is a great technical analysis tool that helps traders identify market trends and take profitable trades.
If you are a new trader then understanding the Marubozu candle pattern is a good start.
I have been trading in the stock market for a long time and so I will tell you about this powerful pattern, what it is, how to recognize it, and most importantly, how to use it for a profitable trade.
An effort will be made to keep this technical article simple and practical examples will be used throughout.
Some Assumptions to View Japanese Candlestick Chart
We had talked about in the previous post that the best part of Japanese candlestick is its pattern formation and it is these patterns which help us in taking trades.
These candlestick patterns can also be single or multiple, but here we will talk about a single pattern whose name is Marubozu and it is also sometimes called Marabozu.
First of all, let us know what should you assume before looking at the Japanese technical chart, that is, what should be your assumptions?
History repeats itself
This means that the price action that has happened earlier may be repeated later also.
Note that this is just an assumption but most of the times this happens on technical charts.
Many times the price goes low, then comes up and then goes down again by the same point, many times it tests low and then hits high and the game continues like this.
One thing is also that if most of the traders are using this technical chart then it is obvious that they come into action when they get the right signal.
Anyway, the stock market is a game of demand and supply which can be seen better on the chart.
Buy/Sell only after seeing the candle
Ideally, you buy on the green candle and sell on the red candle, sometimes the trade is reversed.
But your effort should be that if you trade then buy on bullish sentiments and sell on bearish sentiments, although this rule does not apply to long term investment.
Do not treat the candlestick pattern as bookish.
This means that it is not necessary that the pattern shown to you should be exactly the same on the chart every time and you should take the trade only then.
Note that there is a slight variation (about 0.5%) about which we will talk later.
Trade only with the trend
You should always trade with the trend, but sometimes it happens that you get profit in the counter trend, but this is very rare.
This point means that the trend of the technical chart tells the psychology of the market. If the mood of the market is positive then you should also flow in the same direction.
What is Bullish Marubozu Candlestick :
Bullish Marubozu: This pattern is formed when the opening price is the lowest price of the trading session and the closing price is the highest price. In other words, there is no lower shadow (wick) and the body of the candlestick covers the entire trading range for that period.
A bullish Marubozu suggests strong buying pressure and is considered a bullish signal, indicating that buyers are in control and pushing the price up.
What is Bearish Marubozu Candlestick :
Bearish Marubozu: This pattern is formed when the opening price is the highest price of the trading session and the closing price is the lowest price. Similar to Bullish Marubozu, there is no upper shadow (wick) and the body of the candlestick covers the entire trading range.
A bearish Marubozu reflects strong selling pressure and is considered a bearish signal, indicating that sellers are dominating and driving the price down.
Bullish marubozu
A Bullish Marubozu shows that there is such strong buying demand for the stock that market players wanted to buy it at every price throughout the day, causing the stock to close near its day’s high.
Regardless of the previous trend, the behavior on Marubozu Day means that the stock is now positive and sentiment has changed. It is expected that an increase in bullishness will follow this sudden change in sentiment and this bullishness will last for the following few trading sessions.
As a result, when a bullish Marubozu appears the trader should consider the possibility of buying. The purchase price should be close to the closing price of Marubozu.
Bearish Marubozu: The Rule: “Open Equals High, and Close Equals Low”
Regardless of any previous trend, Marubozu Day behavior means that the attitude has shifted and the stock is now bearish, regardless of the trend previously.
bullish marubozu
A Bullish Marubozu shows that there is such strong buying demand for the stock that market players wanted to buy it at every price throughout the day, causing the stock to close near its day’s high.
Regardless of the previous trend, the behavior on Marubozu Day means that the stock is now positive and sentiment has changed. It is expected that an increase in bullishness will follow this sudden change in sentiment and this bullishness will last for the following few trading sessions.
As a result, when a bullish Marubozu appears the trader should consider the possibility of buying. The purchase price should be close to the closing price of Marubozu.
Bearish Marubozu: The Rule: “Open Equals High, and Close Equals Low”
Regardless of any previous trend, Marubozu Day behavior means that the attitude has shifted and the stock is now bearish, regardless of the trend previously.
What is Marubozu Pattern in Candlestick Charts?
The Marubozu Candlestick Pattern is a single candlestick pattern that has an elongated body and no upper or lower shadows or wicks.
This means that the opening price and closing price are either the high or the low of the day and hence there is no shadow at either end.
Now first of all you look at the graphic given above in which you have a bullish Maruboju candle followed by a bearish Maruboju candle.
Recall the candlestick basics we explained in the previous article and see what stands out to you in this graphic.
I am linking the previous post What are Japanese Candlesticks here.
Yes, you correctly recognized that the above candle does not have a wick or shadow and that is why Marubozu means bald in Japanese because it also has no hair on top.
But here too there are some exceptions which we will talk about further.
By looking at the graphic given above, you can also understand that Maruboju is a single candle pattern.
To identify the Marubozu candlestick pattern you need to look for a long bodied candlestick with no upper or lower shadow.
