The term Marubozu can be translated into Japanese as “Close-Cropped” or “Shaven-Head”.
It is a type of candle-stick pattern which has no upper or lower shadow.
If a candle has no lower shadow, we can say that it has a shaved bottom.
If a candle has no upper shadow (also known as wick), we can say that it has a shaved top.
The interpretation of the Marubozu pattern can depend on the color of candlestick formed.
If it is a long white line pattern or a long black like pattern, it basically means a very bullish day or a bearish day.
In case of a bullish day, if it is a long white (or green/blue) candle then it depicts an UP day.
On the other hand, in case of a bearish pattern, if it is a long black(or red) candle, it depicts a DOWN day.
In a bullish Marubozu, the opening of the candle is very close to the low of the day.
The price keeps on going higher during the day and finally closes at or near the high of the day.
The range between the high and low is very large.
In a similar way, a bearish Marubozu opens near the high of the day and keeps falling to close near the low of the candle.
The qualification of a marubozu candle can only be determined in comparison to the candles immediately preceding it.
For example, if the Marubozu appears as a long day in a very quiet and subdued market, it may be far less long compared to the candles that will precede it in a volatile market.
As the typical trading range for a day in a volatile trading day is much higher.
As a general observation, for a candlestick to qualify as a Marubozu, the body of the candle should be at least three times the size of the previous day’s candle.
If we look at the recent Marubozu candlestick patterns that formed in the Indian stock market lately, we can see the following stocks:
Marubozu candlestick patterns formation in
A Bearish Marubozu pattern formed in the daily chart of Reliance Industries Ltd. on 20.08.2015.
As we can see here, there is no upper shadow in the candle and very negligible lower shadow.
The body of the candle is more than three times the size of the previous day’s candle.
The bearish implications of the candle can be further confirmed by the gap down in the stock the next day.
The bearish marubozu formation on 17.08.2015 in Cipla is another example worth mentioning.
The candlestick formation was accompanied by high volumes.
Its body is longer than three times the size of the candle of the previous day and has negligible upper or lower shadow.
It has also formed a bearish engulfing pattern that day.
With all these confirmations along with the candle of the next day breaking down below the low of the marubozu, the bearish implications panned off the following days when the stock succumbed to the levels of 630 from the levels of 740 six days ago.
If you want to learn candlestick analysis from scratch, you may enroll in NSE Academy Certified Technical Analysis course on Elearnmarkets.com.
In this article, we have tried to help you to gain an understanding of the Marubozu Candlestick Pattern.
There are several other candlestick patterns.You may read about them here.
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