A marubozu candlestick is a full body either bullish or bearish candlestick. They are larger candlesticks with no upper wicks or lower shadows. They are typically green or white on stock charts when bullish and red or black on charts when they are bearish.
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Marubozu candlesticks indicate that a stock traded strongly in one direction throughout the day. It closed at its low price or the highest price of the day. Typically, their candlesticks have a long, real body and no wicks or shadows. However, we know that charts are not always picture-perfect.
A bullish Marubozu has a long, green real body. The bulls were in full control that day. The stock closed higher than it opened and did not have a higher or lower price that formed wicks. These candlesticks are often perceived as very confident, and technical traders look for follow-through.
Basics
The bearish marubozu candle has a long red body. The bears had control and drove the price down. It closed lower than it opened. No high or lows formed wicks.
Marubozu candlesticks are found on all stock charts and all time frames. The marubozu candlestick can be bullish or bearish, depending on who controls the day.
The marubozu is a part of Japanese candlestick patterns and is used with technical analysis to indicate how a stock is traded for the day. The stock market is a war between buyers and sellers.
There are some days when one side wins, hence the formation of the marubozu candlestick. Greed and fear move markets when trading. Traders take advantage of the movement of price. In reality, it is simply trading the emotions of other people.
The invention of candlestick charts allows us to gauge how people around the world view the market. When traders have a handle on what other traders feel, they can use that to their advantage.
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Technicals
One may look at marubozu candlesticks by themselves; however, the overall pattern is part of what is important. Together, the candlesticks paint a bigger picture. These candlesticks tell who controlled the day, like a bullish or bearish marubozu.
A bullish marubozu indicates that buyers controlled the price from open to close and is considered extremely bullish.
Bearish marubozu candles indicate that sellers had control of the price from start to finish, which is a very bearish sign. But again, what pattern is it a part of?
Candlesticks group together to form patterns. These include but are not limited to inverted hammer candlesticks, dragonfly doji candlesticks, and hanging man candlesticks.
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Confirmation
Learning Technical analysis basics is super important with marubozu candlesticks. Just because a bullish marubozu candle forms does not always mean the stock will continue upward. Sometimes, the bears will come in the next day and form a marubozu. This is why knowing trend lines, risk management, volume, and other confirming indicators is important to make the trade.
Candlesticks, along with learning support and resistance, are important—the real bodies and wicks from these levels.
RSI (relative strength index) and candlestick moves can tell whether a stock is overbought or oversold. It will correct no matter which end of the spectrum a stock is on.
If a stock is overextended from the moving average lines, such as the simple moving average, it will want to return to the equilibrium the moving average supplies.
The RSI, along with moving averages, give signals about the moves that are coming. Paired with candlesticks, it helps the trader “see” what the chart tries to tell the trader.
Marubozu Candlestick Trading Strategy
- Watch for bullish or bearish marubozu candlesticks to form
- If bullish, take a long position when the price breaks above the candle
- Place the stop below the candlestick
- If bearish, take a short when the price falls below the candle
- Place stop above candlestick
Marubozu Candlestick Example
This is an example of a bullish marubozu candlestick on a 5-minute chart of $ROKU. Traders take a long entry when the price breaks above the top of the candlestick. You will place your stop if a candlestick closes below the base of the marubozu candle. As you can see, this can be risky because of the large size of the candle. So, if the price starts to fail at the top of the candle, consider exiting your trade.
Also, keep an eye on the volume bars. Many times, you will see large volume bars below bullish marubozu candlesticks. This could signify strong bullish momentum, but it could be a warning to show that the price is overbought, and a reversal could be coming soon.
Bearish Example
This is an example of a bearish marubozu candlestick on a 5-minute intraday chart of $GLD. The chart shows premarket highs and lows mapped out. At open, the price failed to break the premarket high, which created a double top failure. The bearish marubozu candle fell to premarket lows. Technically, traders take a short position when the price falls below the bearish marubozu candle, but it’s risky because it is too large and near premarket support. This would be a perfect example of a trader getting stopped because price action reversed to the upside.
Again, paying attention to volume bars with bearish marubozu candles is important. This example shows large selling pressure but was followed by a large green volume bar, which showed the bulls returning to push the price up. This happened right near support.
TrendSpider will identify the candlesticks for you. You can select patterns and then choose the candlesticks you want to display. Once you have done that, all the selected candles will be highlighted, and you can easily spot marubozu candlesticks.
Final Thoughts: Marubozu Candlesticks
Marubuzo candlesticks are found in all time frames. It is important to see what the technical indicators are signaling, as well as the patterns they are a part of. As always, be sure to wait for confirmation before taking a trade. Trading is not gambling if the trader sticks to their education and game plan.
Frequently Asked Questions
The psychology behind the bullish marubozu candle signals strong buying interest, and the bulls are in control. Bearish marubozu candles indicate that the bears are in control with strong selling pressure.
Since there are no wicks or shadows, marubozu candlesticks are considered either strongly bullish or bearish. They signal that either the bulls or bears were in control.
Traders enter a long trade when the price breaks above the top of a bullish marubozu candle. They take a short position when the price falls below the bearish marubozu. They are large candles so that the risk can be heavy with stop losses.
