Marubozu (or Marubusu) is a term used in candlestick charting in the context of technical analysis of financial markets. A Marubozu is a type of candlestick that has no shadows (or very minimal shadows), meaning that the opening and closing prices are the highest and lowest prices of the day, respectively. This forms a solid candle with no wicks.
There are two types of Marubozu candlesticks:
- Bullish Marubozu (White or Green Marubozu):
- Open: The lowest price of the period.
- Close: The highest price of the period.
- Indication: Strong bullish sentiment, as buyers were in control throughout the entire period.
- Bearish Marubozu (Black or Red Marubozu):
- Open: The highest price of the period.
- Close: The lowest price of the period.
- Indication: Strong bearish sentiment, as sellers dominated throughout the entire period.
Example Interpretation:
- Bullish Marubozu: If you see a Bullish Marubozu, it indicates that the buyers have taken control from the start of the period and maintained it till the end. This suggests strong upward momentum and can be a sign of continuation in an uptrend or a potential reversal from a downtrend.
- Bearish Marubozu: Conversely, a Bearish Marubozu suggests that sellers have been dominant throughout the period. It indicates strong downward momentum and can be a sign of continuation in a downtrend or a potential reversal from an uptrend.
Usage in Trading:
Traders use Marubozu candlesticks to identify potential breakout points, reversals, or confirmations of trends. When a Marubozu forms at key support or resistance levels, it can provide significant trading signals.
Visual Representation:
Here’s a basic representation:
Bullish Marubozu:
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(Open) (Close)
Bearish Marubozu:
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(Close) (Open)
Understanding and correctly interpreting Marubozu candlesticks can help traders make more informed decisions based on market sentiment and price action.
