Bullish Marubozu will show a reversal or continuation pattern. Marubozu itself has two types. For more details, you can read the article below. You can also understand previous articles such as Candlestick Pattern: Complete Explanation, Single, Dual, to Triple.

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What is Bullish Marubozu

Derived from the Japanese word ‘Marubozu’, which literally translates to ‘bald’, the Marubozu pattern is formed with a single candle. According to traders, a perfect Marubozu is a candle that has no shadows – upper or lower, unlike most other candlestick patterns.
 
This candlestick pattern usually has, what is considered a ‘real body’ and is categorized into two types – bullish Marubozu candles and bearish Marubozu candles. These candlestick patterns strongly indicate a trend reversal or continuation, depending on their appearance on the trading chart.
 
Marubozu sends a strong message – the market is trending in one direction. If you break down the candle, you can see that the asset price traded in one direction throughout the session. This characteristic applies to both the open and close of the Marubozu candle even though the wick is small to one side because the buying or selling interest is so strong that it overwhelms the other side of the market.
 
For a bearish Marubozu candle, the pattern signals that sellers are in full control as they dominate the session in the desired direction, and vice versa for a bullish Marubozu candle. Marubozu is especially important if the candle appears near a resistance or support level, as it can open on one side and close on the other side, further adding to the current trend.

Bullish Marubozu Type

Japanese candlesticks generally have two parts to their formation: the body and the wick, also called the shadow.




The body is the colored part of the candle. Most charting packages use red or green, although blue/red and black/white are other popular combinations. Protruding from either end of the body are small sticks called wicks or shadows.



What makes the Marubozu formation unique is the absence of shadows, or wicks. This gives the pattern a large rectangular block appearance. The color of the Marubozu is the only difference between bullish and bearish. Based on the color of the candle reflected on the trading chart, it means that buyers or sellers have taken full control of the market. Trading styles also differ based on the type of Marubozu candle.

That said, regardless of whether it is a bearish or bullish Marubozu, it is imperative that you wait for another confirmation candle before you enter a trade. Let us understand bullish and bearish Marubozu in detail.

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Bullish Marubozu Conditions

It is quite easy to identify a marubozu pattern as it is a single candle that has a real body without any shadows. Typically, when bullish, it is colored white or green on a stock chart and when bearish, it is colored red or black. In a bearish marubozu, the open price is equal to the high price and the close price is equal to the low price. For a bullish marubozu, the open price is equal to the low price and the close price is equal to the high price. The identifying signs for an ideal spinning top are:
  • Big original body
  • There will be no shadow on either side of the candle
  • The color of the candle will have a significant meaning
In real market conditions, perfect marubozu are rare. Therefore, sometimes small differences – usually less than 0.01 percent of the candle range, between the open/close and high/low prices are ignored when identifying marubozu.



How to Read Bullish Marubozu

There are four things you need to know about trading with Bullish Marubozu candles. They are as below:
  1. In a bullish Marubozu, the absence of upper and lower shadows indicates that the low price is equal to the open price, while the high price is equal to the low price.
  2. A Bullish Marubozu indicates increased buying interest in a particular asset among traders, such that traders are willing to buy the asset, regardless of its price point during a session. This causes the asset's price to close near its high during the session.
  3. Bullish Marubozu candles appearing in an uptrend strongly indicate a continuation of the trend. However, when they appear in a downtrend, it implies a trend reversal. Such a situation signals a change in market sentiment, indicating that the stock or asset being traded is now bullish.
  4. With a sharp change in sentiment, traders are expecting to see a bullish surge, anticipating it to continue for the next few trading sessions. In this case, traders should look for fresh buying opportunities after a bullish Marubozu.



The absence of lower and upper shadows in a bullish marubozu indicates that the low price is equal to the open price and the high price is equal to the close price. Therefore, when you see a candlestick with open=low and close=high, it is called a bullish marubozu. This type of candlestick indicates that there was a lot of buying interest in the stock or market participants were willing to buy the stock at any price during that trading session. Therefore, the stock price closed near the high for that session.
 
If a bullish marubozu is displayed during an uptrend, it strongly implies a continuation of the trend. However, when it appears during a downtrend, it indicates a trend reversal, that the market sentiment has changed and the stock is now bullish. It is expected that when this sharp change occurs, there will be a spike in the bullish pattern that is likely to persist for the next trading session.
 
Therefore, a trader should look for buying opportunities after the occurrence of a bullish marubozu. It is advisable that the buy price is slightly above the closing price of the bullish marubozu.


Bullish Marubozu Example
 
Take any chart on any given day and you will be able to see the Marubozu candlestick pattern in one of its forms. In the chart below, we have a USD/CAD chart, where you can see a bullish Marubozu candlestick open.




After a downtrend, price action consolidates with sideways trading. At one point, the bulls take over by pushing price action higher, eventually creating a candle where the open and low are at the same price, but the close and high are far ahead.
 
The market is telling us that the trend is now bullish because buyers controlled price action from the open to the end of the session. The trend then continues higher to eventually create a new short-term high. Trading Marubozu, in terms of entry, take profit, and stop loss, is more difficult than, for example, trading a hammer. This pattern usually produces a strong one-sided candle that is easy to recognize and interpret, but the trading elements are not as clear.
 
The hammer pattern gives you a clean low, which is used to set a stop loss, while the Marubozu relies more on other technical indicators. In this particular case, you can enter a long trade after the bullish Marubozu open is created, as it signals that the trend is likely to continue, but you should use other tools and indicators to set take profit and stop loss orders.
 
This example shows us how the Marubozu candlestick pattern works. This produces a signal that market sentiment is quite one-sided at the moment because, in this case, buyers are taking price action higher without much resistance from the bears.

Benefits of Using Bullish Marubozu

There are advantages to using the bullish Marubozu. The advantages are:
  • It helps you understand market sentiment: The marubozu pattern is great at indicating market sentiment. Traders can use the pattern to find out who has been dominating the market and can use the follow-through candles to gauge exhaustion and profit taking.
  • It may tell you which direction to trade : While you may never trade in the same direction as the marubozu candle itself, it can tell you when to trade against it. But you have to be careful; you will need other factors to align in the direction you want to trade so that you have a high probability setup.
One thing that is clear when a Marubozu candlestick pattern is seen is that a strong trend has pushed price to a high or low for that time period. Generally, this type of price action implies a continuation of a trend. However, this price action is backward-looking, and the location of the Marubozu within the larger trend is critical to its potential rewards.

For example, if a Marubozu occurs near the end of a trend in a burst, it actually sets the stage for a trend reversal, not a continuation. If a Marubozu occurs in the middle of a trend, forex trading opportunities do exist. However, they will not be as lucrative as a Marubozu that occurs at the beginning of a new trend.

So, the location of the Marubozu in the context of the larger trend is important for generating positive signals. Stay away from Marubozu formations near the end of mature trends — unless you are wary of a reversal.

After knowing about the bullish marubozu, then you can apply how the strategy of how to trade with the bullish marubozu. In addition, register to be able to trade with GIC!