How to Trade the Marubozu Candlestick Pattern Like a Pro

Momentum is everything in trading. When market participants see decisive price movements, they recognize a powerful shift in control. When buyers or sellers dominate the market, price moves decisively in one direction.

The Marubozu candlestick pattern is one of the clearest signals of this strong momentum. It represents a single candlestick pattern where price action analysis shows a session moving in a single direction without hesitation, leaving no upper wick or lower wick. Technical traders interpret this as a sign that one side is in full control.

This guide explains how the Marubozu pattern forms, what it tells traders about market trends, and how to use it effectively in trading strategies.

The Marubozu is a Japanese candlestick pattern that indicates strong market momentum. It has a candlestick body with no wicks, meaning the price opens at one end and closes at the other without any significant price retracement during the trading period.

Types of Marubozu Candles

• Bullish Marubozu Candle: The open is the selling price, and the close is the closing price, representing bullish momentum. This shows strong buying pressure throughout the trading day.
• Bearish Marubozu Candle: The open is the highest price, and the closing price is the lowest price, representing bearish sentiment. This shows dominant selling pressure throughout the session.

Key Characteristics:

• Lack of shadows, with no upper wick or lower wick (or very small ones).
• The entire session moves in one direction without sideways movement or price retracement.
• Signifies strong signals of bullish sentiment or bearish trends.
• Often appears at the start of a bull market or bear market, or as a potential continuation pattern.

Traders use this technical analysis pattern to confirm trend direction, but they often wait for additional confirmation before executing trades.

The Marubozu candlestick pattern is illustrated below.

• Lack of wicks, or very minimal ones. The entire trading action moves in one direction.
• Bullish Marubozu Candles: Green body, opens at the low, closes at the high.
• Bearish Marubozu Candles: Black body, opens at the high, closes at the low.
• Indicates strong resistance level, potential trend reversals, or trend continuation.

The Marubozu pattern shows absolute dominance by one side of the financial markets.

• A Bullish Marubozu indicates uptrend signals, where market makers push prices higher with strong market momentum.
• A Bearish Marubozu suggests bearish market sentiment, indicating downward momentum and bearish reversal potential.

When this trading chart pattern appears early in a bull market or bear market, it suggests a strong market trend. However, if it appears after an extended period of movement, it may indicate bearish pressure or bullish exhaustion.

Market Conditions

The Marubozu pattern is often seen in bull markets and bear markets. A Bullish Marubozu Candle confirms an upward trend, while a Bearish Marubozu Pattern confirms a downward trend.

Volatility Considerations

In high market volatility, bearish candles and bullish candlesticks can appear frequently but may provide false signals. In low volatility, a Marubozu pattern can indicate valuable insights into market sentiment.

• No follow-through movement: If the next candle moves in the opposite direction, the pattern loses significance.
• False breakouts: In choppy markets, a Marubozu can appear before price reverses.
• Overextended trends: If a Marubozu forms after a long rally or decline, it may signal exhaustion rather than continuation.

To trade the Marubozu candlestick pattern in a systematic trading approach:

1. Identify a strong market trend.
2. Detect a Marubozu candle with a body without wicks.
3. Require confirmation signals from technical indicators.
4. Set stop-loss levels using proper risk management techniques.
5. Backtest the strategy before using real capital.

The algorithm for trading the Marubozu should be tested using historical price action analysis.

Below is a simple AFL script to detect the Marubozu candlestick pattern in Amibroker:

// Marubozu AFL Code for Amibroker

_SECTION_BEGIN(“Marubozu”);

BodySize = Abs(Close – Open);

CandleRange = High – Low;

UpperWick = High – Max(Open, Close);

LowerWick = Min(Open, Close) – Low;

Marubozu = 

    (UpperWick < 0.1 * CandleRange) AND 

    (LowerWick < 0.1 * CandleRange);

PlotShapes(IIf(Marubozu, shapeStar, shapeNone), colorBlue, 0, High);

_SECTION_END();

This script finds Marubozu patterns and marks them with a blue candle.

The Marubozu candlestick pattern is a reliable indicator of strong market momentum and potential reversals.

• Works best in bullish trends and bearish trends with confirmation signals.
• Helps traders make informed trading decisions.
• It should be used alongside technical analysis tools such as trend lines, short-term EMAs, and price action analysis.

Before using it in live trading, backtesting and proper risk management techniques are essential.

Links to articles about other Candlestick Patterns

1. Doji
2. Hammer
3. Inverted Hammer
4. Bullish Engulfing
5. Bearish Engulfing
6. Morning Star
7. Evening Star
8. Shooting Star
9. Hanging Man
10. Piercing Pattern
11. Dark Cloud Cover
12. Three White Soldiers
13. Three Black Crows
14. Dragonfly Doji
15. Gravestone Doji
16. Spinning Top
17. Marubozu
18. Tweezer Top
19. Tweezer Bottom
20. Bullish Harami 
21. Bearish Harami
22. Rising Three Methods
23. Falling Three Methods
24. Bullish Abandoned Baby 
25. Bearish Abandoned Baby 
26. Bullish Kicker 
27. Bearish Kicker
28. Three Inside Up
29. Three Inside Down
30. Upside Gap Two Crows
31. Mat Hold
32. Upside Tasuki Gap
33. Downside Tasuki Gap