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Marubozu

Mastering the Marubozu Candlestick Pattern in Trading Mastering the Marubozu Candlestick Pattern in Trading Have you been looking at a chart for hours, wondering when to buy or sell? In one moment, the chart is green, screaming “buy.” Next, it’s all red, and the price is falling. Buying or selling becomes a tough decision if you resonate with this. However, candlesticks on your chart can help you. This FXOpen article will help cover one of them – the Marubozu candle pattern. Tag along to learn about this candlestick, its types, and how to trade using it. What Is a Marubozu Candle? A Marubozu is a candlestick with no wicks that has a long body. It signals a strong price action as buyers or sellers dominate the session. “Marubozu” is a Japanese term meaning “bald” or “close-cropped.” It can be bearish (if the open price is above the close) or bullish (if the open price is below the close). When it occurs, traders prepare for a significant price movement. But first, how can you identify it? Marubozu in a Range In a range, the price moves within horizontal support and resistance. It indicates that the buyers and sellers are in a serious battle, and neither dominates. It also shows that traders have their hands folded with little activity. A Marubozu might break the range, indicating that momentum is starting to build up. Aside from range, the Marubozu candlestick pattern occurs in a trend. This might be at its beginning, middle, or end. Marubozu Starts a Trend A new trend starting with a solid price movement may contain a Marubozu. It might pop up due to important news events. Traders who come on board early might have more room to capture new opportunities. Marubozu in Mid-Trend Whether it’s a bull run or a bear market, trends often slow down for some time. This causes traders to slow their activities. Afterwards, trends pick up the pace and continue in the same direction. A Marubozu candlestick pattern may signal that traders’ momentum is back, and they can position themselves for market opportunities. This may occur mid-trend or after the trend halts for a period. Marubozu Ends a Trend The end of a trend is a spot where investors position themselves for new opportunities. Why? A new trend will likely begin, and catching it allows one to place a new trade. This is a reversal, and the Marubozu candlestick pattern can show when it occurs. Marubozu Candle Types There are two main types of the Marubozu pattern in forex, commodity, stocks, crypto*, and other markets. Bearish Marubozu Candlestick What does a red (bearish) Marubozu mean? A red Marubozu indicates strong selling pressure in the market. It forms when the open price is at the highest point of the period and the close price is at the lowest, meaning the price fell consistently throughout the session without any upward movement. You may consider these steps in trading the bearish Marubozu pattern: - Identify the bearish Marubozu. - Consider opening a short trade at the next candle or after a few candles form. - Place the stop-loss level above the nearest swing high. - Take profit at the next swing low, support level, or based on other technical analysis tools. Check this example for a vivid illustration: Bullish Marubozu Candlestick A bullish Marubozu is the opposite of the bearish version. It catches the eyes of bulls seeking buying opportunities. It opens at a low price and closes at a high, so it has no wicks. The significant length of the candle also indicates buying pressure. The theory states you can trade the bullish Marubozu candlestick pattern as follows: - Identify the bullish (green) Marubozu candle. - Consider going long at the opening of the next candle or after a few candles form. - Place a stop-loss level below the closest swing low. - Take profit at the next swing high, when the price begins to range, or when other technical analysis tools signal a price reversal. Here’s an example providing more details: How Can You Confirm a Marubozu? Confirming the Marubozu candlestick pattern involves more than just spotting its distinct body. Traders often look for additional signals to validate the strength and direction indicated by the Marubozu. Traders typically consider the following factors for confirmation: - Volume Spike: A significant increase in trading volume accompanying the Marubozu can suggest the price movement has conviction. The high volume shows that many market participants are behind the move. - Trend Context: Marubozu patterns within an established trend hold more weight. For instance, a bullish Marubozu during an uptrend is more likely to lead to continued bullish action than one in a sideways market. - Proximity to Key Levels: Traders often observe support and resistance levels. A Marubozu breaking through a key resistance or support level confirms momentum, as it shows the market overpowering those critical areas. - Candlestick Clustering: The following candles can provide additional context. For example, if after a bearish Marubozu, bearish candles appear, it reinforces the downward momentum. Limitations of the Marubozu Pattern While the Marubozu candlestick pattern signals strong momentum, it comes with certain limitations that traders must consider: - Lack of Context: A Marubozu doesn't provide enough context on its own. Without understanding the broader trend or the market conditions, it may not accurately determine future price movements. - False Signals in Sideways Markets: In ranging or choppy markets, a Marubozu can create false signals. The pattern might suggest a breakout, but if the market is indecisive, the movement may not follow through. - Absence of Retracement Information: The Marubozu doesn't indicate whether the price will retrace before continuing in the same direction. Traders may enter too early, only to face pullbacks that can hit stop-loss levels. - Dependence on Volume: While a Marubozu shows strong price action, low trading volume can render it unreliable. A lack of volume behind the move could indicate weak conviction from market participants. Trading Strategies Involving Marubozu Finally, let’s take a closer look at a couple of Marubozu trading strategies. Marubozu Retracement Breakout This strategy revolves around identifying a Marubozu candle in line with a broader trend and waiting for a brief price retracement before the trend continues—similar to the concept of a dead cat bounce. Traders can use this setup to capture trend breakouts. Entries After observing a Marubozu candle that aligns with the prevailing trend, traders typically wait for the moment when the price briefly moves against the trend before resuming. Once the retracement is identified, a stop order can be placed at the high (for bullish setups) or low (for bearish setups) of the candle formed before the retracement. Stop Loss Traders may place a stop-loss order above the opposite end of the retracement move. For a bullish setup, this means below the retracement low, while in a bearish setup, it would be above the retracement high. Take Profit Profits might be taken at a favourable risk-reward ratio, such as 1:3. Alternatively, traders may aim for a significant area of support or resistance where a reversal is likely. Marubozu EMA Strategy This strategy combines the Marubozu candlestick pattern with a pair of exponential moving averages (EMAs) to confirm strong trend momentum. Traders often use one short EMA and one long EMA, such as 12 and 28, though some may prefer alternatives like 9 and 21 or 20 and 50. Entries Traders typically look for the Marubozu candle to close strongly through one or, ideally, both EMAs. This signals strong momentum in the trend direction. Some traders may choose this as their entry point, while others may prefer to wait for extra confirmation, such as a crossover between the two EMAs, signalling a stronger trend continuation. Stop Loss Stop-loss orders might be set just beyond the high (for bearish setups) or low (for bullish setups) of the Marubozu candle. Alternatively, more conservative traders might place the stop beyond one of the recent highs/lows, depending on their risk tolerance and the specific setup. Take Profit Profits might be taken at a preferred risk-reward ratio, such as 1:3. Another common approach is to target a significant support or resistance level, where a reversal is more likely. Final Thoughts The Marubozu candlestick pattern, when combined with other forms of analysis and tools, offers traders a powerful way to capture market momentum. FXOpen provides an ideal platform for applying these strategies, offering more than 600 markets, blazing-fast speeds of trade execution, and competitive trading costs. Open an FXOpen account today to explore these opportunities and enhance your trading experience. Good luck! FAQ What Is a Marubozu in Candlestick? The Marubozu candle meaning refers to a candlestick with no upper or lower wicks, indicating that the price opened and closed at extreme levels during a session. Its long body reflects strong buying or selling momentum, depending on whether it’s bullish (green) or bearish (red). How Can You Identify a Marubozu? A Marubozu candlestick can be identified by its lack of wicks. In a bullish Marubozu, the open price is at the lowest point, and the close is at the highest, signifying strong buying pressure. A bearish Marubozu is the opposite, with the open at the highest point and the close at the lowest, showing dominant selling pressure. What Is the Difference Between Bullish and Bearish Marubozu? The difference lies in price movement. A bullish Marubozu opens at a low and closes at a high, reflecting strong buying pressure. In contrast, a bearish Marubozu candlestick pattern opens at a high and closes at a low, indicating strong selling momentum. How Can You Trade a Bullish Marubozu? Traders often look for a bullish Marubozu pattern in uptrends or at key support levels. It suggests further upward momentum. Confirmation through volume or other indicators, like moving averages, is often sought to enhance trading decisions. What Does a Marubozu Determine? A Marubozu determines strong market momentum, with a bullish Marubozu indicating continued upward movement and a bearish Marubozu signalling further downward pressure or a potential trend reversal, depending on the market context. How Does a Marubozu Work? A Marubozu works by showing a candlestick with no wicks, indicating that either buyers (in a bullish type) or sellers (in a bearish type) were in complete control throughout the trading session, signalling strong market momentum in the direction of the candlestick. *At FXOpen UK, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules. They are not available for trading by Retail clients. Trade on TradingView with FXOpen. Consider opening an account and access over 700 markets with tight spreads from 0.0 pips and low commissions from $1.50 per lot. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
1
Bull or bear beat holding +249.2% over a year, in profit in MayAs traders we look to capitalise on all sort of markets, not just parabolic runs. Today we are exploring how to run a long strategy even when the bulls are not in control. WILL POST LAST 50 POSITIONS BELOW We are looking for an strategy that: 1. has been beating buy and hold all year 2. Has a drawdown of max 15% in may 2021 3. Is simple to execute and automate Not all candlestick patterns are created equal, and they do not work on all markets. However they do work in crypto, at least based on experience as they are not tough to identify and speculators tend to react to them. This is why we focused on candles that are not that difficult to identify and are very clear in meaning. The strategy (FULL INSTRUCTIONS): On the 30 min timeframe: We are going to open a position when the candle is a bullish Engulfing We are going to close the position when the candle is bearish Marubozu No stop loss or take profit, these are the only rules we follow, but we follow them a 100% of the time. The results: The strategy brought in 249.17%, beating holding. If you started trading this a year ago with 1 Bitcoin, you would be 2.4917 BTC in profit at the moment. What's even better the max drawdown throughout the year was 22.7% and it was actually in February. During May we were only 11% down at a certain point. This provides a Sortino Ratio of 5.44 which is a stellar mark for these volatile markets. The positions: 31/05/2021 04:30 31/05/2021 14:00 10 hours OP 0.06681 CP 0.068884 +3.1% 29/05/2021 21:30 30/05/2021 19:30 22 hours OP 0.065407 CP 0.067746 +3.58% 29/05/2021 00:30 29/05/2021 18:00 18 hours OP 0.068427 CP 0.066952 -2.16% 28/05/2021 07:30 28/05/2021 14:30 7 hours OP 0.069574 CP 0.069572 -0.00287% 25/05/2021 18:00 27/05/2021 19:30 2 days OP 0.068144 CP 0.071024 +4.23% 24/05/2021 00:30 25/05/2021 03:30 1 day OP 0.061435 CP 0.067043 +9.13% 22/05/2021 22:30 23/05/2021 12:30 14 hours OP 0.062197 CP 0.0581 -6.59% 22/05/2021 11:00 22/05/2021 17:30 7 hours OP 0.064251 CP 0.06059 -5.7% 19/05/2021 22:00 20/05/2021 21:00 23 hours OP 0.066705 CP 0.068997 +3.44% 17/05/2021 23:00 19/05/2021 07:00 1 day OP 0.075193 CP 0.074787 -0.54% 17/05/2021 06:30 17/05/2021 09:30 3 hours OP 0.076593 CP 0.077412 +1.07% 14/05/2021 13:00 15/05/2021 14:30 1 day OP 0.079504 CP 0.078525 -1.23% 13/05/2021 16:30 13/05/2021 23:30 7 hours OP 0.076788 CP 0.074242 -3.32% 12/05/2021 10:30 13/05/2021 15:30 1 day OP 0.075732 CP 0.075619 -0.149% 11/05/2021 06:30 12/05/2021 10:00 1 day OP 0.071125 CP 0.075353 +5.94% 09/05/2021 16:00 10/05/2021 11:00 19 hours OP 0.06759 CP 0.069748 +3.19% 07/05/2021 13:30 09/05/2021 00:30 1 day OP 0.061147 CP 0.065733 +7.5% 05/05/2021 01:30 06/05/2021 23:30 2 days OP 0.061121 CP 0.061832 +1.16% 03/05/2021 00:30 04/05/2021 22:00 2 days OP 0.05225 CP 0.061328 +17.4% 01/05/2021 22:30 02/05/2021 05:30 7 hours OP 0.051064 CP 0.051111 +0.092% 30/04/2021 19:00 01/05/2021 15:00 20 hours OP 0.048829 CP 0.049703 +1.79% 30/04/2021 09:30 30/04/2021 16:00 7 hours OP 0.051113 CP 0.047849 -6.39% 29/04/2021 08:30 30/04/2021 02:30 18 hours OP 0.050351 CP 0.051114 +1.52% 28/04/2021 10:00 29/04/2021 00:30 15 hours OP 0.04799 CP 0.049829 +3.83% 27/04/2021 00:00 27/04/2021 19:30 20 hours OP 0.046896 CP 0.047795 +1.92% 26/04/2021 10:00 26/04/2021 13:00 3 hours OP 0.046466 CP 0.046378 -0.189% 24/04/2021 21:00 25/04/2021 13:30 17 hours OP 0.045035 CP 0.046231 +2.66% 22/04/2021 20:00 24/04/2021 17:00 2 days OP 0.04791 CP 0.044796 -6.5% 19/04/2021 12:00 22/04/2021 18:00 3 days OP 0.039343 CP 0.04728 +20.2% 16/04/2021 10:30 17/04/2021 19:00 1 day OP 0.03943 CP 0.039117 -0.794% 15/04/2021 18:00 16/04/2021 05:00 11 hours OP 0.039286 CP 0.039291 +0.0127% 13/04/2021 17:30 15/04/2021 17:00 2 days OP 0.0363 CP 0.039141 +7.83% 13/04/2021 14:30 13/04/2021 17:00 3 hours OP 0.03575 CP 0.035968 +0.61% 12/04/2021 11:00 12/04/2021 12:30 2 hours OP 0.035761 CP 0.035598 -0.456% 11/04/2021 03:30 12/04/2021 09:30 1 day OP 0.035639 CP 0.035866 +0.637% 10/04/2021 21:00 10/04/2021 23:30 3 hours OP 0.035761 CP 0.035688 -0.204% 08/04/2021 22:30 09/04/2021 13:30 15 hours OP 0.035729 CP 0.035448 -0.786% 08/04/2021 02:00 08/04/2021 18:30 17 hours OP 0.035231 CP 0.035636 NA +1.15% 05/04/2021 05:30 06/04/2021 19:30 2 days OP 0.035409 CP 0.036274 +2.44% 02/04/2021 13:00 04/04/2021 03:00 2 days OP 0.033704 CP 0.035098 +4.14% 01/04/2021 13:30 02/04/2021 04:00 15 hours OP 0.032793 CP 0.033349 +1.7% 30/03/2021 06:30 31/03/2021 22:00 2 days OP 0.03138 CP 0.032743 +4.34% 27/03/2021 09:00 30/03/2021 02:30 3 days OP 0.030822 CP 0.031326 +1.64% 26/03/2021 02:00 27/03/2021 04:00 1 day OP 0.03114 CP 0.030919 -0.71% 25/03/2021 16:00 25/03/2021 20:00 4 hours OP 0.031273 CP 0.030754 -1.66% 23/03/2021 17:30 23/03/2021 20:30 3 hours OP 0.030826 CP 0.03091 +0.272% 20/03/2021 15:30 23/03/2021 00:30 2 days OP 0.031261 CP 0.030839 -1.35% 20/03/2021 00:00 20/03/2021 05:30 6 hours OP 0.031174 CP 0.031295 +0.388% 18/03/2021 18:00 19/03/2021 03:30 10 hours OP 0.030665 CP 0.03087 +0.669% 17/03/2021 07:30 17/03/2021 18:00 11 hours OP 0.031816 CP 0.032216 +1.26%
Education
by CleoFinance
4
#Lesson #5 Marubozu Price Action Candle -- Bearish / Sell Hello Trader's ♥ We Have Today Marubozu Price Action Candle -- Bearish / Sell --------------------------------------------------------------------------- It's Come To Convert The Direction From Up To Down After We See This Candle We Can Sell Direct ---- -- This Is Marubozu Candle >> It's Come With No Wick After We See This Candle We Can Know The Next Direction Is Down But It's Want More Confirmation Like Break Out Trend Line Or Break Out Support Area -------------------------------------------- Best Frame : 4 Hour's - Daily - Weekly Best Pairs : All Markets And All Pairs And You Can Add Marubozu Candle Free Script To Your Chart Just Open Indicator Library And Choose Candles Price Action Patterns And Choose Marubozu Bearish ---- For Any Questions Ask Us On Comments And Wait For New Education Lessons
Education
by Fx_Vanguard