What is a Bullish Marubozu Candlestick Pattern and How to Trade It?
Bullish Marubozu Candlestick Pattern: Traders and speculators use 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 Bullish Marubozu Candlestick Pattern means, its formation, and how to set up trades along with the pattern formation.
Bullish Marubozu Candlestick Pattern
The Bullish Marubozu Candlestick Pattern is a single candlestick pattern that indicates a strong bullish 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, a bullish candle with no wick and a long substance (green candle) is considered a bullish marubozu.
A bullish Marubozu candlestick pattern (green candle) can appear anywhere, regardless of the trend. This means it can appear in a downtrend, uptrend, or sideways market.
However, the best scenario for this pattern to occur is after a significant downtrend, which signals a reversal of momentum. The appearance of a bullish marubozu means that buying pressure is high regardless of the trend.
Since Marubozu candles do not have a wick, the low price of a rising Marubozu candlestick is the same as the opening price and the high price is the same as the closing price.
How to identify a bullish marubozu candlestick pattern?
The bullish Marubozu candlestick pattern is very easy to identify on the chart. Whenever you come across a bullish candle (green candle) that consists only of a long physical body and no wick, it is a bullish marubozu.
The technical definition of a bullish marubozu is that the opening price is low and the closing price is equal to the high price. However, in the market, there may be a slight difference between the open and low price, and likewise, a slight difference between the close and high price. If the difference is very small, traders can consider it a bullish marubozu.
Bullish Marubozu Candlestick Pattern – Psychology
A bullish Marubozu candlestick pattern has no wick because buying intent is so high that buyers are willing to purchase the security at any price during that period. At the open price, buyers are willing to buy at any price, so the price will never fall below the open price and the closing price is equal to the highest price.
No matter what the previous trend was, the appearance of a bullish marubozu is a strong signal of a bullish movement.
Also read…
Bullish Marubozu Candlestick Pattern – Key Features
- A candlestick has no wick.
- The candle must be a bullish candle (green candle).
- The candlestick should have a long physical body.
- It can appear anywhere, regardless of the trend, but is perfect for downtrends. Once formed, it indicates a bullish movement.
- This is also typically observed in high bullish trading volumes.
Bullish Marubozu Candlestick Pattern – Trading Strategy
- Entrance – The appropriate entry is to take a long position at or above the closing price of a bullish Marubozu. Traders should only take long positions after a bullish Marubozu candlestick pattern has ended.
- profit target – Exit the trade near the immediate resistance zone. Once this level is reached, you can also take a partial profit on the trade and hold the remaining position until the next resistance level.
- Stop Loss – The stop loss should be set just below or at the open price of the Bullish Marubozu Candlestick Pattern.
Bullish Marubozu Candlestick Pattern – Example
In the chart above, the candles surrounded by rectangles are bullish Marubozu candlestick patterns.
Open = 230.70 High = 237.25 Low = 230.65 Close = 236.90.
As you can see above COAL INDIA LTD. It was moving sideways without much movement in either direction. However, once the bullish Marubozu candlestick pattern was formed, the price saw a big bullish move. Here the trader could take a buy position at a price above Rs.237.25 and the stop loss would be Rs. 230.00
Read more: 30 Important Candlestick Patterns Every Trader Should Know
conclusion
In this article about the bullish marubozu candlestick pattern, we understood what a bullish marubozu is, its meaning, characteristics and how traders can trade it. The bullish Marubozu candlestick pattern provides a strong bullish signal and traders should combine it with volume indicators to confirm bullish 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 the bullish Marubozu candlestick pattern? Please let us know through the comments section.
Written by Praneeth Kadagi
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