The marubozu candlestick pattern is one of the candlestick patterns that frequently appear on the price chart and if you know how to use this candlestick pattern, it can help traders make very potential profits. But in reality, not many traders take advantage of signals from marubozu candles to trade.

This article would like to share with you traders how to trade the marubozu model and the accompanying practical examples.

Marubozu Candles

The picture below is a bullish marubozu candle:

A marubozu candle is a candle with a large body and no upper and lower tails or extremely small tails. With the signal provided to the trader, it is a signal that shows the urgency of the market players when continuously pushing the price in one direction. That means that when the price of marubozu rises, the market will usually expect the price to continue rising in the short term and vice versa.

But the reality of the market is not always what we expect. So you need a strategy that can take advantage of the signal of this candlestick pattern. And this article will share it with you.

How to trade with the Marubozu candlestick pattern

There are 4 steps to analyze the market in combination with the marubozu candlestick pattern:

Step 1: Analyze the market context

Includes things like trend analysis and trend strength. In addition, you also identify important resistance levels.

Step 2: Identify the marubozu . candle

If you follow the right trading steps, finding an ideal marubozu candle (without a tail) is quite difficult. So we need to relax the requirement for finding this candlestick pattern. It is acceptable that the marubozu candle has a very small tail (less than 5% of the full size of the candle).

Step 3: Use marubozu candles to support the analysis

That is, instead of using marubozu for trading, this should be used to support analysis. It is important to focus on the market reaction to each marubozu candle.

For example, in an uptrend, we would expect a bullish marubozus candle to prompt a continuation of the uptrend and vice versa. When the reaction to the marubozu candle does not meet our expectations, we should take advantage of that signal to adjust our judgment.

Step 4: Find the right setting

Example of trading with marubozu . candles

Example 1: Frame D1

We first observe the market's reaction to each marubozu candle and then use this information to gauge the trend.

  1. The uptrend is clear and this bullish marubozu candle has supported the market to make a new higher high. Then a price gap appears indicating that the market is likely to continue to rise.
  2. This second marubozu candle, although longer than the other, did not provide any significant signals. After that, a tug-of-war was formed, showing the possibility of a reversal.
  3. The price rejection at this pullback is seen as a sell signal that may enter the market.
Example 2: Frame H4 Khung

  1. Connect 2 peaks to form a downtrend line.
  2. These 2 marubozu candles did not create the motivation to continue to decrease the price for the trend, instead they were rejected and the price increased again.
  3. The market struggled just below the downtrend line. There are times when the price breaks through the trendline.
  4. The price crosses the trend line. There will be traders who hesitate to buy at this point but keep in mind the bearish marubuzo did not provide any viable bearish signal so we can totally consider buying in this case.
Example 3: Frame M5 Khung

In this example we will use the marubozu candle as a possible entry signal.

  1. The market is moving sideways
  2. Marubozu is bearish and the market rejects this signal. So is this a bullish signal?
  3. However, the market fell again.
  4. The above price action shows that the bears are taking control. The price is pushed lower and the whole is below the SMA. And finally the market broke the support in the previous sideways price zone.
  5. As the market confirmation is in a downtrend, a rejection of the bullish marubozu is a possible setup. The circled area is where selling pressure appears and here we can open a short position.
Example : Trading the breakout of the D1 . frame

  1. The market formed 2 bearish marubozu candles below the SMA. However, both models were rejected.
  2. This Tuesday Marubozu pushed to a new bottom and looks like a solid bearish break. But after only one bearish candle, the market reversed and went sideways.
  3. It seems that the market reacted properly to the signal of this bullish marubozu candle. Buyers seem to be in control so far.
  4. Hence, we can trade up when the price breaks the resistance level. In this case you can enter with bearish marubozu rejected when price breaks resistance and pullback back to test.