Bearish Marubozu Candlestick Patterns – Psychology and Trading Planning
Bearish Marubozu Candlestick Pattern: Traders and speculators rely on technical analysis to analyze and predict future movements in market prices. Candlestick patterns are a part of technical analysis favored by traders to understand and predict future price movements of securities.
In this article, we will discuss what the Bearish Marubozu Candlestick Pattern means, its formation, and how to set up trades along with the pattern formation.
Bearish Marubozu Candlestick Pattern – Meaning
Bearish Marubozu is a single candle pattern that indicates a strong bearish movement. Marubozu means ‘bald head’ in Japanese. When we talk about a candlestick, we mean that a candlestick without a wick and with an actual long body is considered a marubozu. Therefore, bearish candlesticks (red candles) without a wick and with a long physical body are considered bearish marubozu.
The Bearish Marubozu Candlestick (red candle) can appear anywhere, regardless of the trend. This means it can appear in a downtrend, uptrend, or sideways market. The best scenario for this pattern to occur is after a significant uptrend, implying a reversal of momentum.
Note: If you want to learn candlestick and chart trading from scratch, here are some of the best books available on Amazon! Get the book now!
The appearance of a bearish Marubozu candlestick pattern means that selling pressure is high regardless of the trend.
How to identify a bearish Marubozu candlestick pattern?
The Bearish Marubozu candlestick pattern is very easy to identify on the chart. Whenever you come across a bearish candlestick (red candle) that consists only of a long physical body and no wick, it is a bearish marubozu. The technical definition of Bearish Marubozu is open = high price, close = low price.
In the market, there can be a small difference between the open price and the high price, and similarly, there can be a small difference between the close price and the high price. If the difference is very slight, traders may consider it a bearish marubozu.
Also read…
Bearish Marubozu Candlestick Pattern – Psychology
The Bearish Marubozu candlestick pattern has no wick because selling intent is so high that sellers are willing to sell securities at any price during that period. At the open price, the seller is willing to sell at any price, so the price does not exceed the open price and the closing price is equal to the reserve price.
No matter what the previous trend was, the appearance of a bearish marubozu is a strong signal of a bearish movement.
Key features of the Bearish Marubozu candlestick pattern
- There is no wick in the candlestick.
- The candle must be a bearish candle (red candle).
- The candlestick should have a long physical body.
- It can appear anywhere, regardless of the trend, and once formed it indicates a bearish movement.
- It is also typically observed on high bearish volume.
Bearish Marubozu Candlestick Pattern – Trading Ideas
- Entrance – The appropriate entry is to take a sell position below the closing price of Marubozu, which is in a downward trend. Traders should only take a sell position after the bearish Marubozu candle closes.
- target – Traders can exit a trade when the stock’s price reaches near an immediate support zone. Once this level is reached, you can also book a partial profit on the trade and hold the remaining position until the next support level.
- Stop Loss – Stop losses should be placed just above or at the open price of a bearish Marubozu candlestick.
Bearish Marubozu Candlestick Pattern – Example
In the STATE BANK OF INDIA 1-day chart above, a Bearish marubozu has formed. As discussed in this article, the price fell after a bearish Marubozu candlestick was formed.
When this bearish Marubozu candle was formed, traders could take a short position at Rs. 568, the stop loss was Rs. 597
Read more: Rising Window Candlestick Pattern
conclusion
In this article, we understood what the Bearish Marubozu Candlestick Pattern is, its meaning, features and how traders can trade it. Bearish Marubozu provides a strong bearish indicator and traders should combine this with volume indicators to identify bearish movements.
Traders are also advised to set an appropriate stop loss to minimize losses if a trade goes against their analysis. What do you think about this pattern? Let us know in the comments section.
Written by Praneeth Kadagi
By leveraging the Stock Screener, Stock Heatmap, Portfolio Backtesting and Stock Comparison tools on the Trade Brains portal, investors have access to comprehensive tools to identify the best stocks, stay updated and informed with stock market news. invest.
Start your stock market journey now!
Want to learn stock market trading and investing? Check out exclusive stock market courses from FinGrad, a learning initiative from Trade Brains. You can sign up for free courses and webinars from FinGrad and start your trading career today. Sign up now!!
