Marubozu Candle: Marubozu Candlestick Pattern




    Candle Stick Patterns : Marubuzu Candle


As we mentioned earlier, the most important concept in TA is that history repeats itself. TA uses this notion over and over again. This is the most important concept. It is also necessary to understand this concept of TA more deeply. Suppose today is 10th July 2019 and some things are happening in the market.


1. First Event – ​​The stock has been falling continuously for the last 4 days.

2. Second Event – ​​Today is the 5th day of trading on 10th July 2019 where the shares are falling.

3. Third event – ​​The range of the share price is also very small compared to the previous days.


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Keeping these in mind, now you think that on the next day i.e. on July 11, 2019, the fall of the shares stops and the stock also closes the market with a slight increase. So the stock market went up on the sixth day as a result of the last three events.


Some time passes and again for 5 days in the market we see the same phenomenon as we saw earlier. Now what will you expect for the next day i.e. the sixth day? Our concept was "that history repeats itself." We add one more thing to our belief, that is when the events of the last few days were like this, then perhaps the incident of now can also be like this and it is also true quite often.


This is an assumption as well as technical analysis and we will know how it works because trades are not done on these assumptions only.


Candlestick Pattern:-


We use candlestick patterns to understand trading patterns. Pattern, that is, when a particular kind of event gives indications of a particular way, then it is called a pattern. Based on the pattern in TA, your trade is decided. In any pattern, two or more candles are arranged in a particular way. But sometimes a pattern can be understood from a candlestick as well. Therefore candlestick patterns can be divided into single candlestick patterns and multiple candlestick patterns.

The following are Single Candlesticks, we will understand them one by one.


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1. Marubozu Candle :- 1. Bullish 2. Bearish Marubozu.

2. Paper Umbrella Candle :- 1. Hammer 2. Hanging Man.

3. Doji Candle.

4. Spinning Top Candle.

5. Shooting Star Candle.


These were all single candle stick patterns, apart from all this, there are some candle patterns which are formed when more than one candle is combined, we call them Multiple Candlestick Patterns, these are the following


1. Engulfing Pattern :- 1. Bullish 2. Bearish

2. Herami :- 1. Bullish 2. Bearish Herami

3. Piercing Pattern

4. Dark Cloud

5. Morning Star

6. Evening Star


You might be thinking that what is the meaning of all this, so as we told you that it was invented in Japan, then obviously its name will also be in Japanese language, this (candlestick) will prove to be very helpful in making trading strategy. It is possible, but if I say it, it happens. Each pattern has a risk strategy as well as entry and stop loss price and exit signals. Which you have to recognize, which I will tell you further.


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Before we start knowing about the pattern, it is very important to keep some other things in our mind. You may not understand these concepts completely right now but as you progress you will understand about them in more detail.


1. Buy in bulish market and sell in weakness.

2. In each pattern you can change your trade any time so take some margine.

3. View the previous trend of any pattern.


Single Candlestick Pattern


As the name suggests, it is a candlestick pattern. It is formed on the basis of one day trading session. Trading based on this pattern can give a lot of profit if you have identified that pattern properly and done the deal properly. You also have to look at the length of the candle properly.


You must remember that the length of the candlestick tells the range of the day, as we said earlier that the longer candle shows higher buying and selling of that day. If the candlestick is very small then the reason is that there has been very little buying and selling in that stock these days. You can also see all these patterns yourself on Investing.com or on Moneycontrol.com , I will show you the picture here too.




1. Marubozu Candle :-


This is the single candlestick pattern that we begin to explore further. Since the candle originated from Japan, not only this, but the name of all the candles is in the Japanese language and in Japanese it means - bald. These are of two types Bullish & Bearish.


Now for another example Marubozu is the only pattern on the chart that doesn't always match the number 3 concept. You can see this candle anywhere throughout the chart, regardless of the previous trend. Despite this, it does not make any difference to the deal done on its basis. This is the candle in which there are no shadows on the top and bottom, hence it is called marubozu (bald). There is only and only real body in it, although this rule is also not always true, sometimes it is different from this that even if there is a very light shadow, we should consider it as Marubuzu.




Bullish Marubozu :- The absence of upper and lower shadows means that LOW is equal to OPEN and HIGH is equal to CLOSE. Open = Low and Close = High A Bullish Marubozu indicates that there is too much buying in the market and buyers want to buy it at all costs and are also buying


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That's why the stock closes at its high point. It doesn't matter whether the previous trend was bull or bear. This type of action indicates that the mood and atmosphere in the market has changed and the stock is now fully bullish. It can be speculated that due to this change, the bullishness may remain now and it may also remain so for the next few days. That's why you should look for opportunities to buy shares in such a situation. The buy price in Bullish Marubozu should be the closing price of this candle. Its picture is shown below




Here you should note that in the same chart, you will see Marubuzu candles at three places and the price of the stock has also been going up continuously.


If you look carefully at the Marubozu candle, you will see that there is no shadow above or below it. O-H-L-C of this candle is Open = 971.7 , High = 1030.1 , Low = 970, Close = 1028.3


Please note here that according to the definition of the book, Open = Low and High = Close. But here in this example the reality is slightly different. However, if you look at it in percentage, it is not a huge change, there is only a difference of 0.17% in percentage. This is where the second rule comes into force, to be prepared for the slightest change and to check. From this marubozu you will be able to know that the market is now on the rise and now is the right time to buy the stock. The correct price for this deal would be:


Buy price = around 1028 and stop loss = 968


Now that we are ready to buy shares after seeing Marubozu in chart, the right time to buy the shares will depend on what is your ability of risk taking , there are 2 types of traders in the market - one risk taker one risk avoider .


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1. The risk taking trader will buy the stock on the day he sees a marubozu being formed, although he has to be sure that the marubozu actually there in  the chart. By the way, it is also very easy to check, as you know that the stock market closes at 3:30, then it has to be seen 8 to 10 minutes before the market closes i.e. around 3:20. The current price of the CMP is equal to the highest price of the day and the market opening price of the lowest price.


If both these things are fulfilled then you will know that Marubozu is made in the market on that day. Another way is also that you see the day candle, and you can buy the stock. Your purchase should be around the closing price of the market. The trader taking the risk is also buying the stock on a bullish i.e green candle day and he is following the rule number 1 that buy in strength and sell in weakness.


2. The risk averse trader will buy the stock when he is sure that the Marubozu is formed on the previous day but before buying the stock, he must make sure that the bullish trend remains on the day when he is buying because that's the rule number 1 will be following, this means that he has to buy the shares when the market is about to close.


One of the difficulties with this type of trading is that the buy price is always slightly higher than the recommended buy price, so the stop loss is also very big. It takes a trade only when it is done. Here let's take a look at the chart where both the risk taker and the risk averse trader who takes benefit of it.





Stoploss in Bullish Marubozu :-


What would you do if the stock changed direction after your purchase in the market and the deal turned upside down? I have already said that candlestick patterns have their own risk aversion mechanism. In Bullish Marubozu stock low price will be its stoploss. If you bought a share and the market went to the other side, then you should exit from your stock (when the stock breaks its low) I am showing you the picture below.




Marubozu pattern is formed here then also the trade results in a loss. The stoploss for this deal will be Marubozu's Low i.e. lowest price of 959.85 by the way, sometimes making losses in deals is a part of stock trading and even very experienced players sometimes incur losses.


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But the big advantage of candlestick trading is that the loss doesn't last very long, it is very clear when you have to exit your trade. Because the stock is continuously going down. However, it may also happen that after your stoploss i.e. after you exit the stock, the stock changes its direction and starts moving upwards again.


But you cannot avoid this because it is also a common practice in the market. One special thing is that whatever happens in the market, you do not have to forget your rules, it is most important to follow them.


Bearish Marubozu :-


Bearish Marubozu means that the market is in a bearish state. Here open equals high and close equals low. The Bearish Marubozu suggests that the selling mood is so high among the market participants that the market participants want to sell at any cost and exit. Because of which the stock closes near its lowest price.


In such a situation, it does not matter what was the trend before it. The Bearish Marubozu indicates that the mood has changed and the market is bearish. Here also it is expected that this change in mood will continue for the next few days and the stock will continue to be bearish. In such a situation, opportunities should be found to short the stock and the selling price in the short should be around the closing price of that day.


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This candle also does not have upper and lower shadows. As we have already mentioned that slight fluctuations in the OHLC figures is not a big deal, just that its range should be small i.e. the variation should not be much. This time, on the basis of this marubozu, the share will be sold and the selling price will be Rs 341. And the stoploss will be the highest price of that day's candle i.e. Rs 357.


Although we haven't learned what the target price should be yet but we will discuss it further but remember that you don't have to exit the trade until the target is hit or the stoploss is hit. If you do something before either of these hits, your deal may turn upside down. So it is very important to have this discipline.


The deals will be done based on your risk taking ability. A risk taking trader can initiate a trade on the same day if he sees a Bearish Marubozu in the candle. For this, he has to make sure around 3:20 pm that Open = High and the current market price (CMP) is the lowest price of that day's market.


If it looks like this it means Bearish Marubozu is certain and can take a short position. If the trader wants to avoid the risk, he will wait till the next day's closing. He will create his short position the next day around 3:20 when he comes to know that this day is also a red candle day, thus he will also be able to follow the first rule that buy in strength and sell if there is weakness. Both the risk taker as well as the trader who avoids it will benefit.


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Now let's see another chart where Bearish Marubozu, both risk taker and averse trader will benefit one more thing to remember that these are short term trades and profits here Take it out as soon as possible.




Trade Trap :-


At the beginning of this chapter we talked about candle length. If the candle is very small i.e. its range is below 1% or if the candle is very large and its range is more than 10%, then should not take trade. When the candle is short, it means that there are very few trades and in such a situation, it is very difficult to understand the direction of the trade .


In this environment, your stoploss will be huge and you can lose a lot if the trade turns upside down. That is why it is better not to trade at the time of big and small candles.


Now we will learn about candle stick in our next chapter, till then you should revise all the articles written by me, if you have any question then you can ask in the comment section, I will definitely answer your every question.

Thank you


By - www.marketkipathshala.in

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Candle Stick Patterns : Marubuzu Candle

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