In this article, you will learn about the Japanese Marubozu candlestick and what signals it gives to buyers and sellers.

Translated from Japanese, the name of the pattern means “close-cropped” or “shaven-head”. This pattern is similar to Japanese candlesticks such as bullish or bearish counterattack and belt hold. They all have a large real body that has short or no shadows.

After studying the article, you will be able to identify this figure on the chart and apply it in trading.

The article covers the following subjects:

What Is Marubozu Pattern?

The Marubozu pattern is a long candle with a large body, with no or very short shadows. There are three types of Marubozu candlesticks on price charts:

1. Marubozu open candle has a full body with no shadow on the side of the opening price and a small shadow on the side of the closing price.

2. Marubozu close candle has no shadow on the closing price side and has a small wick on the opening price side.

3. Marubozu full candle has only a body and no shadows.

How to Find the Marubozu Candlestick Pattern?

It is hard to miss this candle, as it is large in size. Its appearance on the chart indicates a strong movement in any particular direction. There are two types of Marubozu candlestick patterns:

• bullish Marubozu;

• bearish Marubozu.

Bullish Marubozu

A bullish Marubozu is a white (or green) candlestick with a large body that has no or very small shadows.

The appearance of this pattern on the price chart means that buyers control the market, and the uptrend is likely to continue. This candlestick is also called the white Marubozu.

Bearish Marubozu

The bearish Marubozu candle is similar to the bullish Marubozu. It has the same long body and no shadows. The only difference is the color of the candlestick. It can be red or black.

Experienced traders call this pattern black Marubozu. It indicates the continuation of the downtrend.

Confirmation of Marubozu Candlestick Pattern

As a rule, the “Marubozu brothers” are formed on increased trading volumes. Therefore, to identify Marubozu, add a volume indicator, MA Cross tool, and MACD to the chart.

The crossing of the zero zone by MACD and moving averages serves as an additional confirmation of the Marubozu candlestick. Therefore, it is profitable to open a buy or a sell trade at the intersection of these indicators.

Other stronger reversal candlestick patterns, such as bullish hammer, hanging man, inverted hammer, and others, can serve as additional confirmation of the Marubozu candle’s appearance at the bottom or at the top.

You can learn more about how to read a candlestick chart in this article.

Should You Trust the Marubozu Pattern?

There are many tools for technical market analysis, including candlestick patterns. However, you should not completely trust patterns and indicators, as they only indicate a possible outcome but do not guarantee it.

Tips for trading on the candlestick chart, including the Marubozu pattern:

• do not trade against the trend; open trades in the direction of its movement;

• set stop losses and follow risk management rules with the risk-reward ratio of 1:3;

• trade candlestick patterns entered at levels;

• study the peculiarities of a traded instrument, as some of them may ignore the levels.

How to Trade Marubozu Candlesticks

The principle of trading Marubozu candlesticks and other candlestick patterns is the same. Let’s take USCrude as an example.

The 15-minute chart shows the formation of a bullish Marubozu pattern as part of the morning star reversal pattern. Before that, a hammer reversal pattern was formed, which warned traders that prices were ready to rise and the asset reached a local bottom.

The combination of these patterns served as the first signal for the bulls. Then another closed Marubozu candle was formed. At this point, according to the MACD technical indicator, there is an upward crossing of the zero line. This factor finally confirmed the local uptrend.

After careful analysis, I decided to open a minimum long trade of 0.01 lots. Stop-loss was set at 115.320. Some time later, the trade was closed intraday with a profit of $12.41.

Trading with Bullish Marubozu

Algorithm for trading bullish white Marubozu:

• look for a bullish Marubozu candle in the zone of low prices after a downtrend, or in an uptrend when the resistance level is broken out;

• enter purchases after a short-term downward correction or during a further price growth above the maximum price of the Marubozu candle;

• set a stop loss slightly below the minimum price of the Marubozu candle pattern;

• place take profit orders at the nearest strong resistance level, in case of a price reversal.

Trading with Bearish Marubozu

The algorithm for trading the bearish Marubozu candle pattern is the opposite of the bullish pattern:

• the pattern is formed in a bullish trend after reaching a strong resistance level in the zone of high prices, or in a downtrend when the support level is broken;

• it is possible to open a short trade after a short upward correction or below the low of the candlestick pattern;

• set stop loss just above the high of the Marubozu candlestick;

• take profits when a support level is reached or when signs of a reversal appear.

Marubozu signals and setting stop-loss

A buy or sell trade is opened after the Marubozu candle pattern is confirmed by technical indicators or other candlestick patterns.

When a bearish Marubozu appears, set the stop loss slightly above the high of the long red candlestick. If a bullish Marubozu appears in the chart, set the stop loss just below the green candle’s low.

Pattern Examples

There are three different types of Marubozu candles. The pattern appears in any financial markets, such as securities, currency, cryptocurrency, and commodity markets.

Below is an example of a Marubozu pattern on an Apple stock chart. After the appearance of a black open bozu, one of the types of Marubozu pattern, the asset rapidly declined, overcoming local support levels and forming other black Marubozu patterns.

A bearish open Marubozu candle indicates strong pressure by sellers on the price from above. As a result, the asset declines, where the bulls’ stop losses are triggered. This makes the bears even stronger.

The bullish Marubozu patterns on the BTCUSD chart are shown below.

The daily chart shows that the asset continues to rise after a bullish Marubozu closing pattern appears. A long white Marubozu closing pattern warned traders of an impending bullish rally and price growth.

Marubozu and Engulfing Pattern

Marubozu and engulfing are reversal patterns in candlestick analysis. Below are the differences between these two patterns:

• Marubozu is a single candlestick pattern;

• the engulfing pattern consists of two candles, where the second candle engulfs the previous one;

• the engulfing candle can be high or low, since the most important thing is the engulfing of the first candle’s body;

• after the appearance of a Marubozu in the chart, the price begins a massive downward or upward pressure, with almost no corrections;

• the body of the Marubozu candle is larger than the body of the engulfing candle.

For both patterns, shadows are not particularly important. However, the classic Marubozu and engulfing patterns do not have shadows at all. This indicates the superiority of one of the trading parties, which leads to a price reversal up or down.

Conclusion

It should be stressed that bullish and bearish Marubozu are reversal patterns in candlestick analysis that appear in various financial markets and time frames.

In addition, the Marubozu pattern signals market participants’ growing activity, while increased market volatility provides an opportunity to open profitable trades.

This article covered the following aspects:

• characteristics of the Marubozu pattern;

• varieties of the Marubozu pattern;

• principles of trading the Marubozu pattern;

• differences between engulfing and Marubozu;

• an example of live trading this pattern.

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