Definition:
The Black Marubozu is a single candlestick pattern
characterized by a long black body. It does not have
any shadows on either end. It is an extremely strong
bearish candlestick pattern.
Recognition Criteria:
1. A black Marubozu is characterized by not having
upper or lower shadows and by its long black body.
2. It shows that the prices moved down all day long
after the opening thus forming the long black body.
3. Then the day closes at its lowest level that explains
the absence of the lower shadow.
Explanation:
A Black Marubozu forms when the opening price is equal
to the high price of the day while the closing price
is equal to the low price of the day. This shows that
the sellers controlled the price action from the first
trade to the last trade. When a Black Marubozu day occurs,
the day opens and prices continue to move down all day
long without stopping. It may show continuation of the
downtrend or a final sell off attempt before the bulls
regain control.
Important Factors:
A Black Marubozu may be the initial phase of a bearish
continuation pattern but it may also signal a bullish
reversal depending on the preceding day's candlesticks.
The Black Marubozu is a single candlestick pattern
with low reliability. It reflects only one day’s
trading with a potential to signal both continuation
and reversal. It must be used with other candlesticks
for the confirmation of a trend.
