Technicals Stability Returns
Marubozu is a single candlestick pattern, and it is a Japanese name that means "bald." It is also one of the most well-known and popular candlestick patterns. With a full-length body and barely any shadow or wick, this candlestick pattern is difficult to overlook. Depending on their appearance on the trading chart, these candlestick patterns strongly indicate a trend reversal or continuation.
A perfect marubozu is extremely rare on a daily or weekly chart. However, on intraday charts, they may be observed during periods of very volatile and strong movement.
Bearish Marubozu indicates that sellers are taking control over the market. In such a case, the selling pressure is high, and market participants are willing to sell that particular stock at any possible point during the trading session. As a result, the stock price is close to its low point. A perfect marubozu is extremely rare, which makes it difficult for traders to identify when trading in the market. As a result, most traders overlook minor differences in stock opening and closing prices, setting a high/low price.
A perfect bearish marubozu candle is one in which the opening price equals the high and the closing price equals the low. It has no shadow, unlike the bearish closing and opening marubozu. As previously said, the perfect bearish marubozu is extremely difficult to find on the daily, weekly, and monthly charts. However, it may be observed on intraday charts on 5 minute, 10 minute, 15 minute, and so on ticks. It signifies a strong bearish indication when it shows up on charts with high volume.
A bearish closing marubozu is the inverse of a bullish closing marubozu candlestick pattern. It is formed when the closing price is equal to the low price with an upper shadow. Depending on where the candle of this kind forms on the chart, it might represent a reversal or continuing control. When the closing marubozu forms in a downtrend together with other bearish candles, it verifies the strength of the trend. And if it forms during an uptrend, it might be a trend reversal indication. The bearish marubozu must have at least 90% to 95% of the candle body compared to the height of the entire candle.
A bearish opening marubozu is formed when the opening price is equal to the high price and its lower shadow is smaller than the body. If it forms during a downtrend, it may indicate that the trend will continue. And contrary to that, if it forms during a downtrend, it may act as a reversal signal. Same as bearish closing marubozu, to form a bearish opening marubozu, it must have at least 90% to 95% of the candle body compared to the height of the entire candle.
The bearish Marubozu candle indicates that the sellers have complete control of the market. The level of selling pressure is so high that market participants are willing to sell stock at any price during the market. As a result, the stock price closes near its low point for that time.
When the bearish marubozu is formed during a downtrend, it indicates the continuation of a strong trend. And on the other hand, when it appears in an uptrend, it indicates a trend reversal, implying a shift in the market trend.
By combining the marubozu candlestick pattern with any other technical indicators, such as volume, CMF, MACD, and so on, it confirms this pattern and allows one to quickly identify a trend change or a buy signal.
When the bearish marubozu occurs in an uptrend with high selling volume, then it can be seen as a trend reversal indicator. And after the formation of the bearish marubozu, the next one or two candles also should be bearish and appear below the bearish marubozu with more selling volume, then it provides a strong bearish signal and traders can take a short position here. But the entry position for traders can be different as per their nature. Conservative traders wait for the next one or two candles for confirmation, while aggressive traders enter immediately after the formation of the bearish marubozu. Traders can put a stop loss at the opening price or high price of the bearish candlestick. If the marubozu candle body length is very large, then the stop loss point is very high, which can lead to a high point loss. In such scenarios, traders can put stop loss at the previous candle's point. In this strategy, a trailing stop loss will be more useful.
Bearish Marubozu indicates a strong bearish signal, but no indicator or chart/candlestick pattern gives 100% certainty of trend or trend reversal. Building a strategy and testing it before using it is very important.
When the bearish marubozu forms and also MACD gives a bearish signal by crossing below the signal line, then it may give confirmation that the trend is now bearish.
TSR will provide you with pre-created screeners in PreScreener, which you can simply select from. For example, Bearish Marubozu on Daily tick.
(A) In custom screener you can select multiple candlestick patterns along with Bearish Marubozu, such as bearish harami, bearish engulfing, and many more.
(B) Create your own powerful, customised strategies with Custom Screener. For example, MACD bearish crossover along with bearish marubozu candle on a 5 min tick. ( You can choose from a variety of ticks in TopStockResearch, from a 5-minute tick to a monthly tick, and choose your stock basket depending on your needs.)
Simple Bearish Marubozu Screeners are available in public view for free while more comprehensive screeners are available to premium customers.
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