The marubozu candlestick pattern is a powerful technical analysis trading strategy. It is easy to trade and can give you some significant profits. This article will describe the marubozu candlestick pattern and how you can trade it to make money in the stock market.
Marubozu Candlesticks Explained
The marubozu pattern forms from a single Japanese candlestick found on any price chart, including stock charts, forex charts, or futures trading charts. It is easy to identify and can provide a good trading pattern. The marubozu candlestick has a considerable-sized body compared to recent candlesticks on a chart. It also contains little to no wicks on either side of the candlestick.
The pattern signals that the stock has been traded actively throughout the period, with solid buying or selling pressure. The marubozu candle can be classified as bullish or bearish, depending on whether it is green or red.
This type of candle indicates that the stock price traded was highly bullish or bearish throughout the candlestick period (depending on if it is a green or red candle). The pattern can be formed on various chart time frames, from minutes to hourly or even daily periods.
The marubozu candlestick can be found at any point on the trading chart. It can form at the beginning or end of a trend or after a period of consolidation. It is a powerful pattern and can give you significant profits if traded correctly.
The marubozu candlestick pattern is a simple but effective stock trading strategy that beginners and experienced traders can use.
Marubozu Candle Types
There are three types of marubozu candles that we will discuss below:
1. Marubozu open
A bullish marubozu open occurs when the opening price equals the low price for the candlestick period. A bearish marubozu open occurs when the opening price equals the high price for the candlestick period. See bullish and bearish examples below.
2. Marubozu close
A bullish marubozu close occurs when the close price equals the high price for the candlestick period. A bearish marubozu close occurs when the close price equals the low point for the candlestick period. See bullish and bearish examples below.
3. Marubozu full
A full marubozu candle means that both the open and close were marubozus. So, for a bullish full marubozu, the open price is equal to the low, and the close price is equal to the high for that period. For a bearish full marubozu, the open price equals the high price, and the close price equals the low. See bullish and bearish examples below.
The strongest of the types listed above is the full marubozu since it confirms that the buyers or sellers were in complete control during that entire candlestick period. However, all of these types are available to be traded.
Trading the Marubozu
The key to trading this pattern effectively is to look for confirmation from other indicators or sources before entering a trade. For instance, if you see a marubozu candle on a price chart, you would then look to see if the volume for that period was higher than usual. If trading volume exists, that would be confirmation that the marubozu candlestick pattern is valid and worth trading.
Another method to confirm the candle is to look to see if the candle occurs at a support or resistance level or a significant supply or demand zone. Suppose the marubozu candle occurs at these points on the chart. In that case, this could provide further confirmation of a continuation of the price movement or confirmation of a reversal.
Also, be sure to trade in the direction of the trend. A strong marubozu candle that gets created in the same direction as the overall trend provides an additional level of confirmation to enter a trade. Trading with a strong trend will ensure that you are trading in the price direction of the market participants and market movers. When trading with the trend direction, wait for the marubozu candle to form during a slight price pullback.
Also, look to determine if the candle is bullish or bearish. If the marubozu candle is green (bullish), it indicates that the stock is currently up trending and that you go long on the stock. If the marubozu candle is red, it suggests that the stock is in a downtrend, and you should look to sell or short the stock.
When trading the marubozu candlestick pattern, it is also good to wait for the next candlestick to open and close in the same direction as the marubozu candle. Waiting will confirm that the trend is still intact and that there is still buying or selling pressure in the market.
Once you have confirmation, you can enter a trade by buying or selling the stock once price breaks the candle.
All strategies require risk management to keep your losses low and manageable. If you are buying the stock, you should place a stop loss below the low of the marubozu candle. If you sell the stock, you should put a stop loss just above the high of the marubozu candle.
Regarding profit levels, look for the next level of support or resistance or look for a minimum 1:1 reward to risk ratio to ensure that you do not lose more than your expected gain.
This pattern is a simple but effective stock trading strategy that can be used to make profits in the market. By following these guidelines, you can trade the marubozu candlestick pattern effectively and make profits in the market.
Summary: Marubozu Candlestick Pattern
The marubozu candlestick pattern is a powerful stock trading strategy that traders can use to generate profits in the market. This single candle pattern is easy to spot and can provide traders an excellent opportunity to enter or exit a trade. The strategy can be traded in all types of markets and supports professional traders (day and swing traders).
Similar to the marubozu trading strategy, we also have a simple system to trade candlestick charts that do not rely on technical indicators. However, we utilize the leverage from options trading to make money in the stock market.
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