In Japanese, "marubozu" means "with little hair." This is a reference to the expected small or non-existent upper or lower shadows on this candlestick.
The black marubozu is one variety of a long black candlestick and may have small upper and lower shadows. However, these will be quite small compared to the non-marubozu long black candlestick, which may have much longer upper or lower shadows. The appearance of the black marubozu is bearish because, like all black sessions, it opens at the top[ and closes at the bottom, so price moved downward in the session.
A second variety is the black opening marubozu. This has only a lower shadow and no upper shadow. This often is seen within a current downtrend, and in that case the opening black marubozu is a continuation signal. A third version, the black closing marubozu, also works as a continuation signal in a downtrend, or a reversal at the top of an uptrend.
All forms of black marubozu are clearly bearish as varieties of the long black candlestick. By describing the formation as "long," it means longer than the average preceding it, and the distinction is purely relative. Depending on the scaling of the chart, it could be a fraction of a point or many points. This is a visual test. As long as the sessions before are much shorter, it's a long candlestick.
The marubozu is among the strongest of one-session indicators. For this reason, when you spot an unusually extended session, pay attention to it and to where it appears in the current trend. It may confirm other signals or act as a lead signal which then needs additional confirmation, of either reversal or continuation.
You can discover the world of effective chart reading with Profitable Trading Strategies Using Candlestick Charting. This is a comprehensive and complete course on the nature of candlestick charting, offered exclusively by the Global Risk Management Community. By the conclusion of this course, you should be able to locate actionable candlestick signals, better understand what is likely to occur next, and combine candlesticks with other technical signals to forecast price movement. To find out more, go to Using Candlestick Charting
Comments