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. For a pattern to be classified as a marubozu candlestick formation, at least one of the open or close has to be flat. In the Marubozu full example, both the open and close are flat, e.g. the asset opens the session, starts rallying in a certain direction and closes at the exact end. Thus, open and close are at the same price as are the high and low.
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.
Bullish Marubozu indicates an increased buying interest in a given asset among traders, so much so that traders are willing to buy the asset, irrespective of its price point during a session. This causes the asset’s price to close near its high point during that session.
A bearish marubozu indicates that there is so much selling pressure in the stock that the market participants actually sold at every price point during the day, so much so that the stock closed near its low point of the day.
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
he Marubozu candlestick pattern is a candlestick pattern that looks like a block, meaning that it does not have any wicks (Marubozu, in Japanese, means “bald head” or “shaved head”). It is a relatively unpopular pattern but one that works relatively well when it is spotted.
The Marubozu candlestick is a lesser-known pattern among forex traders, as it’s rare to find it on trading charts. However, Marubozu formations are easy to identify once you know what to look for. Once the Marubozu pattern is spotted, you can determine how effective its signal may be based on the pattern’s location within a larger trend.
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.
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