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What is the Marubozu candlestick pattern?

The Marubozu candlestick pattern is a single-candle bearish pattern. It is a straightforward formation that is easy to spot.
Characteristics of the Marubozu pattern
There are three types of marubozu candles:
  • A Marubozu open
  • A Marubozu close
  • A Marubozu full

In all three cases, there are bullish and bearish versions of this candle.

Different types of Marubozu candles

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 i.e. 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.

As for the Marubozu open, the opening price should be flat: i.e. the price action should move only in one direction, but unlike the Marubozu full candle, the closing price on the other side can slightly differ from the high/low. In other words, the open should be flat, while there is room for a short wick on the other side.

The Marubozu close candle is opposite to the Marubozu open: the close should be flat while the price action can slightly move in the other direction before it starts aggressively trading in one direction.
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What does a Marubozu pattern tell you?
The Marubozu sends a powerful message - the market is trending in one direction. If you break down the candle, you can see that the asset’s price trades in one direction throughout the session.

This characteristic is applicable to Marubozu open and close candles despite small wicks to either of the sides as buying or selling interest was so strong that it overwhelmed the other side of the market.

For bearish Marubozu candles, the pattern signals that the sellers are in full control as they dominated the session in the desired direction, and vice versa for the bullish Marubozu candles. Marubozu is especially important if the candle occurs near the resistance or support levels, as it can open on one side and close on the other side, and further add to the current trend.
Trading with the Marubozu candlestick pattern
Take any chart on any given day and you will be able to spot the Marubozu candlestick pattern in one of its shapes.

In the chart below, we have the USD/CAD chart, where you can see the bullish Marubozu open candlestick.

A bullish Marubozu open on MT5

After a downtrend, the price action consolidates by trading sideways. At one point, the bulls take charge by pushing the price action higher, finally creating a candle where the open and low are at the same price, but the close and high are far upfront.

The market is telling us that the trend is now bullish as the buyers controlled the price action from the open to the session’s end. The trend has then continued higher to ultimately create the new short-term high.

Trading Marubozu, in the context of entry, take profit, and stop loss, is more difficult than, for instance, trading the hammer. This pattern usually produces strong one-sided candles that are easy to spot and interpret, but the trading elements are not as clear.

A hammer pattern gives you a clean low, which is used to determine the stop loss, while Marubozu is more dependent on the other technical indicators.

In this particular case, you can enter a long trade after the bullish Marubozu open is created, as it signals that the trend is likely to continue, but you should use other tools and indicators to determine profit-taking and stop-loss orders.

This example shows us how the Marubozu candlestick pattern works. It generates a signal that the market sentiment is quite one-sided currently as, in this case, the bulls took the price action higher without much resistance from the bears.

In the second example, we have the opposite situation. The price action has reversed its course and it now trades in a bearish environment. After two long red candles, the bearish Marubozu close pattern occurs, which signals that the bears are still a dominant force.

USD/CAD - a bearish Marubozu close on MT5

Ultimately, the price action continues to move lower as the market was very bearish during this period of time. The importance of the bearish Marubozu close candle is that it signaled to us that the dominant trend is set to continue as the bulls are unable to change the trend direction.

It is important to note that in both occasions, Marubozu candles only generated a signal about the future price action outlook. Unlike the reversal patterns that are more powerful with the signals or warnings that they generate, Marubozu is usually used only to confirm that the price action may continue in the same trend.

For instance, if you are short USD/CAD from the reversal point, an occurance of the bearish Marubozu close tells you to stay in a trade as the bears are still in control.
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Summary The Marubozu candlestick pattern is a single-candle formation that signals the market’s determination to dominantly trade in one direction without a strong opposition from the other side, and force a close at the high or at the low of that particular session.

The pattern is characterized by a long powerful body that has no wicks to either side. This is a normal Marubozu pattern, that can be bullish or bearish, depending on the direction. If there are wicks to either side, we make a difference between Marubozu open and Marubozu close, with both of these candles available in bullish and bearish formats.

The significance of the Marubozu candlestick formation is that it signals that the market is currently one-sided and the price action is likely to continue moving in the same direction as there are no signs that the reversal is impending.

As always, consult other technical indicators when generating a signal through the Marubozu candle, especially when looking at entry, stop loss, and take profit, as this pattern is not as precise as some other formations based on Japanese candlesticks.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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