What is The Marubozu?
The Marubozu is the opposite of the Doji candlestick pattern. The Marubozu’s opening and closing prices are at the extreme ends of the candlestick.
When a Marubozu appears, you see essentially a rectangle or box.
If price closes higher, then we know that the trend is quite bullish. If price closes lower, then we know that the trend is quite bearish.
How Do We Trade The Marubozu?
The Marubozu is usually traded best when the market has been in a defined trend.
For example, if the market has been in a downtrend, the appearance of The Marubozu could be an indication of the continuation of the trend.
If a strong breakout occurs following a Marubozu, then the likeliness that the continuation of the trend is much higher.
In the example below, we see 2 examples of the Marubozu, following a defined downtrend. Our expectation is that if price breaks below the previous low, then there will be a continuation of the trend.
We have 2 options as traders. Set a pending order for just below that low, or to wait for the candle body to break the low and enter at market price.
It is best not to enter until after the full duration of the candle to make sure it is not a fake out.
In these examples, price broke and displayed continuation patterns, as we expected with a potential gain of over 1100 pips.
In my next lesson, I will be covering the Harami candlestick pattern, if you missed my last lesson covering The Doji, feel free to access it here – CLICK HERE
See you then!