How to Identify & Trade Marubozu Candlesticks

  • July 25, 2018

Watch our video on how to identify and trade marubozu candlesticks or read below if you'd like a quick summary.

What Is a Marubozu Candlestick & How to Identify These Candlesticks?

  • A marubozu candlestick is a full body either bullish or bearish candlestick. They are larger candlesticks and don't have any 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.

Marubozu candlesticks are found on all stock charts and all time frames. The marubozu candlestick can be bullish or bearish depending on who controlled the day.

The marubozu is apart of Japanese candlestick patterns and are used with technical analysis to indicate how a stock traded for the day. The stock market is a war between buyers and sellers.

There are some days one side wins hence the formation of the marubozu candlestick. Greed and fear move markets when stock trading. we as traders think we're trading the movement of price. In reality, we're trading the emotions of other people.

The invention of candlestick charts allows us to gauge how people from around the world view the market. When we have a handle on what other traders are feeling,we can use that to our advantage.

1. Basics of Marubozu Candlesticks

Maru candlesticks indicate that a stock traded strongly in one direction throughout the day. It either closed at its low price of the day or highest price of the day.

Typically marubozu candlesticks have a long real body and no wicks or shadows. Although we know that real world charts aren't always so 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. It didn't have a higher or lower price that formed wicks. These candlesticks are often perceived as very confident, and technical traders look for follow through. 

The bearish marubozu candle has a long red real body. The bears had control and drove price down. It closed lower than it opened. No high or lows formed wicks (bookmark our stocks lists page which is updated daily).

Marubozu Candlesticks

2. Technicals of Marubozu Candlesticks Patterns

You can look at marubozu candlesticks by themselves but looking at the overall pattern they're apart of is important (try our stock picks service free for 14 days).

These candlesticks tell you who controlled the day. A bullish marubozu indicates that buyers controlled the price from open to close and is considered extremely bullish. But what if it was apart of an overall bearish pattern?

Bearish marubozu candles indicate that sellers had control of price from start to finish and is a very bearish sign. But again, what pattern is it apart of?

Candlesticks group together to form patterns. These include but are not limited to inverted hammer candlesticks, dragonfly doji candlesticks, and hanging man candlesticks.

A candlestick by itself tells a story, like a bullish or bearish marubozu. But together, candlesticks paint a bigger picture (bookmark our penny stocks list and stock watch lists pages, which are updated daily).

Marubozu Candlesticks

A bullish marubozu candlestick formed on the chart for SPOK. Previously the bears had been in control with those .bearish candlesticks. The bulls came in and pushed price up and bull flag patterns began to form from there.

3. Confirmation

Learning Technical analysis basics is super important with marubozu candlesticks. Just because a bullish marubozu candle forms doesn't mean the stock will continue to go up. Sometimes the next the day the bears will come in and form a marubozu of their own. You need to know your trend lines, volume, and sometimes other confirming indicators to make the trade. And please, don't forget risk management. 

Candlesticks are so important along with learning support and resistance. The real bodies and wicks form these levels. Traders are super aware and obey these levels.

Using RSI (relative strength index) along with candlestick moves can tell you whether a stock is overbought or oversold. No matter which end of the spectrum a stock is on, it's going to correct.

Use moving indicators to confirm the move of the stock. If a stock is overextended from the moving average lines, such as the simple moving average formula, it's going to want to return to the equilibrium the moving average supplies.

The RSI along with moving averages give you signals about the moves that are coming. When you pair that with candlesticks, you're in business.

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Marubozu candle sticks

TrendSpider will actually identify the candlesticks for you. You can select patterns, and then pick the candlesticks you would like to display. Once you have done that, all the candles that you selected will be highlighted and you can easily spot marubozu candlesticks. 

How to Trade Marubozu Candlesticks

  1. How to trade marubozu candlesticks:
  2. Watch for bullish or bearish candlestick to form.
  3. If bullish, take a long when price breaks above.
  4. Place stop below candlestick.
  5. If bearish, take a short when price falls below.
  6. Place stop above candlestick.
Marubozu Candlesticks

The chart for MNTA formed a strong bullish marubozu candlestick. The RSI was in overbought territory and it closed far from the moving average lines. The very next day a strong bearish marubuzo candle formed driving price back down to the moving averages. Price fell a couple days, forming a hammer candle and went back up with another strong bullish marubuzo candlestick

Summary

Marubuzo candlesticks are found on all chart time frames. It's important to see what the technical indicators are signaling as well as the patterns they're apart of.

Day trading a marubuzo candlestick might be something you find easy as one side is in control for the day. Take the time to study candlesticks. It's the first line of defense in trading.

All the other stuff like technical indicators are useless if you don't know candlesticks. They give warnings before the indicators do. Take our free online courses to sharpen your trading skills with our educational program!

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