The Marubuzo is a one-candle pattern and indicates the direction of a trend. The word “Marubozu” means “baldhead in Japanese. The candlestick pattern gets its name because it has no wicks.
What is the Marubozu candlestick pattern?
The presence of the Marubozu describes that the price opens high and closes at the low. The pattern comprises a long signal candle with no extensions and can appear anywhere on the chart.
This is what the pattern looks like:
The Marubozu can be identified easily on the chart; however, when finding it, traders should look for the following criteria:
- Marubozu is twice the size of a regular candle. It can also be larger.
- There are no upper and lower wicks.
Although the structure of the Marubozu involves no wicks, it is very difficult to find a large candle with no wicks. Therefore, a big candle with the little wick can be considered as a Marubozu. Hence, there are three types of Marubozu:
- Pattern with no wick (Marubozu full)
- Pattern with a bullish upper wick and bearish lower wick (Marubozu open)
- Pattern with a bullish lower wick and bullish upper wick (Marubozu close)
A keynote to include is there can’t be wicks at both ends. One of the ends of the candlestick has to remain flat. And, the longer the candle, the higher its effectiveness.
There is a similarity between the Engulfing pattern and the Marubozu, but Marubozu does not always engulf the following candles.
How to use the Marubozu candlestick pattern?
The Marubozu comes in two variations; bullish and bearish.
In the bullish version, the Marubozu emerges in an uptrend, while in bearish variation, the Marubozu appears in a downtrend.
Traders can take advantage of Marubozu as the candlestick pattern tells a reversal and continuation of a trend.
When the Marubozu appears after a breakout, there are strong chances of trend continuation. The candle next to Marubozu can confirm the trend’s persistence. If the candle next to the Marubozu isn’t bullish or bearish, traders may want to refrain from entering the trade. For example, if a trader finds the Marubozu in an uptrend, but the candle next to the pattern is not bullish, then there is a chance that the trend may not continue.
Marubozu can also detect a trend reversal. When the pattern appears near the support and resistance levels, it may indicate a price reversal. Traders can take positions after the appearance of Marubozu.
Although the pattern can identify price reversal and continuation, traders should utilize other indicators with Marubozu. This is because sometimes, Marubozu can generate false signals.
Marubozu candlestick pattern trading strategy
As mentioned earlier, the Marubozu can surface anywhere on any timeframe. So, it can help short-term and long-term traders.
One way to implement Marubozu for a forex trading strategy is to use it with momentum oscillators like the RSI and Stochastics.
Marubozu candlestick pattern buy strategy
- Find the pattern in an uptrend or downtrend (in case of a reversal).
- Wait for the price bar to go bullish before entering.
- Enter the trade at the candle next to Marubozu.
- Set a stop-loss near the pattern’s recent low.
- Exit the trade before the price drops.
Marubozu candlestick pattern sell strategy
- Locate the pattern in a downtrend or uptrend (in case of a reversal).
- Wait for the price bar to go bearish before entering.
- Enter the trade at the candle next to Marubozu.
- Set a stop-loss near the pattern’s recent high.
- Exit the trade before the price rises.
Marubozu candlestick pattern conclusion
Marubozu is a simple candlestick pattern that can be identified easily on a chart. Traders could confirm Marubozu’s signals by combining it with other indicators.
I would prefer to use the majority of candlestick patterns such as the Marubozu Pattern on the 1-hour charts and above. I tend to find that these charts contain less market noise than the lower time frames and thus give more reliable signals for my forex trading strategies. This also means that I spend less time staring at charts and can also set alert notifications to let me know when price has reached certain levels, candlestick pattern has been formed or a particular indicator value has been reached.
The Marubozu Pattern is just one method of market analysis amongst thousands. I would not build a trading system alone, but rather combine with other technical indicators such as moving averages, Parabolic SAR, Stochastic Oscillator, RSI, ADX and price action analysis.
Of course, every trading system will generate false signals which is why money management is so important. I would personally be implementing sensible money management and only take traders that give me a favorable risk to reward ratio, ideally of at least 1:3. This means that one losing trade does not wipe out consecutive winners.
The methods of implementing the Marubozu Pattern into a trading strategy that are outlined within this article are just ideas. I would always ensure that I have good money management, trading discipline and a trading plan when using any forex strategy.
Furthermore, I would combine multiple technical analysis, fundamental analysis, price action analysis and sentiment analysis to filter all entries. You should trade forex in a way that suits your own individual style, needs and goals.
If you would like to practice trading with the Marubozu Pattern, you can open an account with a forex broker and download a trading platform. If you are looking for a forex broker, you may wish to view my best forex brokers for some inspiration.