What Is Bullish Marubozu Candlestick Pattern And How To Trade?

Bullish Marubozu Candlestick Pattern: Traders and speculators rely on technical analysis to analyze and predict the future movement of the price in the market. Candlestick patterns are a part of technical analysis preferred by traders to understand and predict the future price movement in securities.

Here in this article, we will discuss the Bullish Marubozu Candlestick Pattern with its meaning, formation, and how to set up a trade with the pattern formation.

Bullish Marubozu Candlestick Pattern

A Bullish Marubozu Candlestick Pattern is a single candlestick pattern that indicates a strong bullish movement. Marubozu in Japanese means ‘bald’; in terms of candlesticks, it means that a candlestick without a wick with a long real body will be considered marubozu. So, a bullish candlestick (green candle) with no wick and a long real body is considered a bullish marubozu.

A Bullish Marubozu Candlestick Pattern (green candle) can appear anywhere regardless of the trend. Meaning, it can appear at a downtrend, uptrend, or in a sideways market. 

But, the best-case scenario for this pattern to appear is after a significant downtrend as it indicates a reversal in the momentum. The appearance of a bullish marubozu indicates that there is high buying pressure irrespective of the trend.

Since there are no wicks in a marubozu candlestick, a bullish marubozu candlestick’s low price is equal to the open price and the high price is equal to the close price.

How to Identify a Bullish Marubozu Candlestick Pattern?

A Bullish Marubozu Candlestick Pattern is quite easy to identify on the chart. Whenever you come across a bullish candlestick (green candle) that is comprised of only a long real body and doesn’t have any wick, then it is a bullish marubozu. 

The technical definition of a bullish marubozu is that open price is equal to the low price and close price is equal to the high price. But, in the market, there might be a small difference between the open and low prices and similarly, there might be a small difference between the close and high prices. The trader can consider it a bullish marubozu if the difference is very minute.

Bullish Marubozu Candlestick Pattern – Psychology

A Bullish Marubozu Candlestick Pattern has no wick because the buying intent is so high that the buyers are willing to buy the security at every price in that time frame. From the open price, the buyers are willing to buy at every price and hence the price doesn’t go below the open price and its close price is equal to the highest price.

No matter what the previous trend was, the appearance of a bullish marubozu is a strong indication of bullish movement.

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Bullish Marubozu Candlestick Pattern – Key characteristics

1. The candlestick has no wick.
2. The candlestick must be a bullish candle (green candle).
3. The candlestick must have a long real body.
4. It can appear anywhere irrespective of the trend but preferably suited during a downtrend. Once formed, it indicates a bullish movement.
5. It is generally observed with high bullish volumes as well.

Bullish Marubozu Candlestick Pattern – Trading Strategies

• Entry – the proper entry is to take a long position at or above the close price of the bullish marubozu. A trader should only take a long position after the close of the Bullish Marubozu Candlestick Pattern.
• Profit Target – exit the trade near the immediate resistance zone. Once this level is reached, you can also book partial profits in the trade and hold on to the remaining position until the next resistance level.
• Stop loss – the stop loss should be placed right below or at the open price of the Bullish Marubozu Candlestick Pattern.

Bullish Marubozu Candlestick Pattern – Example

In the chart above, the candlestick enclosed by the rectangle is a Bullish Marubozu Candlestick Pattern. 

Open = 230.70  High= 237.25  Low = 230.65 Close = 236.90.

As you can see above, COAL INDIA LTD. was moving sideways with no significant movement towards any side. But once the Bullish Marubozu Candlestick Pattern was formed, the price had a huge bullish movement. Here, traders could have taken a long position at a price above Rs.237.25 and the stop loss would be at Rs. 230.00

Read more: 30 Important Candlestick Patterns Every Trader Should Know

Conclusion

In this article on the Bullish Marubozu Candlestick Pattern, we understood what a bullish marubozu is, its meaning, its characteristics, and how a trader can take a trade. A Bullish Marubozu Candlestick Pattern gives a strong bullish indication and the trader must couple it with the volume indicator to confirm its bullish movement.

It is also recommended that traders place appropriate stop loss in place so that the loss can be minimized in cases where the trade goes against the analysis. What do you think about the Bullish Marubozu Candlestick Pattern? Please let us know in the comment section.

Written by Praneeth Kadagi

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