The Marubozu pattern is a powerful trend reversal or trend continuation pattern that can be used to initiate almost any kind of trade. There’s a bullish and bearish version of this candlestick, so you’ll need to learn to identify each before you can trade with them. Marubozu is Japanese and loosely means Close-Cropped, which tells you that it’s a candle body without wicks or shadows.
When done properly, this candle can be rather hard to find on charts. However, when it does appear, you can usually be fairly confident that it will be a reliable and accurate indicator of future trading action, especially if you combine this signal with other factors. I’ll be discussing how to initiate both buy and sell trades using the Marubozu later in this guide.
This pattern analysis is part of a much larger training series that will teach you everything you need to know to successfully trade candlestick charts. Make sure you take a look at the complete guide here: Japanese Candlestick Chart Analysis.
The first candlestick pattern I want to talk about is the green / white Marubozu. This is a bullish indicator that can signal both trend reversals and continuations. To identify it, you need to see a solid body with no wicks or shadows. Technically, the body can be any length, but I really prefer to see longer bodies for added trend strength.
This candle should show up after a price downtrend or in the middle of a rally. When it shows up at the end of a bear trend, it often indicates that the market sentiment is switching to the upside. However, when it shows up in the middle of a price rally, it’s not a reversal indicator but a continuation pattern instead.
The picture I’ve created for you below demonstrates the green Marubozu pattern:
The opposite candlestick is the bearish Marubozu, which will be a red or black candle depending on your chart settings. It will also be identified as a solid body candle with no shadows and can indicate both reversals and continuations.
For a trend reversal, you want to see this pattern at the end of a price rally. During falling prices, the pattern will simply tell you that the trend is likely to continue.
The Red / Black Marubozu candle example below shows you how to identify it:
It can be easy to dismiss the relevance and power of the Marubozu pattern because it only consists of a single candlestick. However, that one candle is actually quite important and can tell you a lot about the market sentiment and emotional state of both buyers and sellers.
This pattern is rather rare because of the lack of candle shadows. When you don’t have any shadows, it tells you that the price action never went outside of the opening and closing price. That’s a pretty clear trading direction without backlash from the other side, so it’s a signal of power.
Bullish candles tell you that demand is outpacing supply, selling activity is weak, and price action rapidly rises as a result. You get the opposite from a bearish candle – bulls have a firm control on the price action. This strong indicator is why a single candlestick can fairly reliably tell you what the future price action will be.
How to Trade the Marubozu Pattern
It can actually be somewhat difficult to find a Marubozu pattern on a candlestick chart when you’re doing it right. Each candle should represent somewhere between 4 hours and a full day worth of trading activity. With that longer timeline, Marubozu’s will be quite rare. On a short timeframe, you’ll see this pattern everywhere but it won’t be accurate to initiate trades.
Take a look at the chart below to see 3 examples of this pattern in action. This is a real cryptocurrency chart from a low-cap altcoin. Higher volatility assets can be extremely rare to flash this signal. Hunting through years of Bitcoin and Ethereum charts, I was really only able to find 1 or 2 examples of this pattern, and they really weren’t very strong examples.
This chart is excellent though because it shows you both bearish and bullish patterns and examples of both trend reversals and trend continuations. Notice the price action before each pattern. With reversals, the price action switches direction, but it continues in the same direction with a continuation. By simply looking at the surrounding candles and trends, you can quickly identify what a Marubozu pattern is likely to do to the market.
Trend Reversals & Continuations
Besides looking at price action leading up to this candle pattern, you can also utilize support and resistance levels to help figure out if prices are likely to reverse or continue. Support and resistance lines can also be great confirmation signals to use in combination with this pattern to confirm a likely price direction before you initiate a trade.
If prices are dropping and they approach a level of support when a bullish Marubozu appears, it could be a great place to place an order to buy. During rising price action when you’re nowhere near a resistance level and a bullish pattern appears, you could also initiate a long position. These would also be ideal places to take profits on shorts.
When the value is going up towards a line of resistance with a bearish Marubozu, this is often an ideal opportunity to open a short position or take profits on longs. The same can be said for a continuation when the pattern appears in the middle of a downtrend when it’s not close to reaching a support level.