The Marubozu candlestick pattern

As the name suggests, a single candlestick pattern is formed by just one candle. So as you can imagine, the trading signal is generated based on 1 day’s trading action. The trades based on a single candlestick pattern can be extremely profitable provided the pattern has been identified and executed correctly.

One needs to pay some attention to the length of the candle while trading based on candlestick patterns. The length signifies the range for the day. In general, the longer the candle, the more intense is the buying or selling activity. If the candles are short, it can be concluded that the trading action was subdued.

The following picture gives a perspective on the long/short – bullish, and bearish candle. The trades have to be qualified based on the length of the candle as well. One should avoid trading based on subdued short candles. We will understand this perspective as and when we learn about specific patterns.

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The Marubozu

The Marubozu is the first single candlestick pattern that we will understand. The word Marubozu means “Bald” in Japanese. We will understand the context of the terminology soon. There are two types of marubozu – the bullish marubozu and the bearish marubozu.

Before we proceed, let us lay down the three important rules about candlesticks:

Marubozu is probably the only candlestick pattern that violates rule number 3. A Marubozu can appear anywhere in the chart irrespective of the prior trend; the trading implication remains the same.

The textbook defines Marubozu as a candlestick with no upper and lower shadow (therefore appearing bald). A Marubozu has just the real body. However, there are exceptions to this, which we’ll cover shortly.

Bullish Marubozu

A bullish marubozu has Open = Low and High = Close. It shows strong buying across the entire session. The sentiment has turned bullish, regardless of prior trends.

bullish marubozu

A bullish marubozu indicates that there is so much buying interest in the stock that market participants were willing to buy the stock at every price point during the day. The stock closed near its high point, indicating a sentiment change to bullish.

Buy Price = Around closing price of marubozu and Stoploss = low of the candle.

Example OHLC: Open = 971.8, High = 1030.2, Low = 970.1, Close = 1028.4. While technically Open ≠ Low or High ≠ Close, the variation is within 0.17% — acceptable as per Rule 2.

In a real trade scenario, stoploss = low of marubozu. Example: O = 960.2, H = 988.6, L = 959.85, C = 988.5. Stoploss = 959.85. Even if the trade fails, losses are capped due to disciplined stoploss management.

Another example with Asian Paints: Risk-taker might enter and lose if next day is bearish; risk-averse waits and avoids loss. Rule 1 validated.

Bearish Marubozu

A bearish marubozu has Open = High and Close = Low. It shows intense selling pressure and signals bearish sentiment.

bearish marubozu

Example OHLC: Open = 355.4, High = 356.0, Low = 341, Close = 341.7. The bearish marubozu suggests intense selling. A trader should consider shorting the stock around the close.

Stoploss = high of the marubozu. E.g., if high = 356.0, that becomes the exit point for the short trade.

Another example: Cipla chart shows a bearish marubozu. Both risk-taker and risk-averse traders were profitable due to disciplined entry and stoploss.

Trade Trap

Avoid candles that are too short (<1% range) or too long (>10% range). Short candles mean unclear sentiment; long candles pose stoploss challenges. Extreme candles can result in unreliable trades.

🔑 Key Takeaways

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