What is a maribozu candle?
The pattern got its name from the only candle included in it - "maribozu", which in Japanese means "shorn, bald, with a shaved head." The candle that makes up the pattern has a large body and almost no shadows. Thus, it turns out that her tails were cut off, leaving only a “bald” large body.
Candles "Maribozu" are of three types:
Full "Marubozu" (Marubozu Full) - this candle has almost no upper and lower shadows.
Opening "Marubozu" (Marubozu Open) - the candle has no shadow from the opening price and there is a small tail from the closing price.
"Marubozu Close" - this candle, on the contrary, does not have a shadow from the closing price, but has a small tail from the opening price.
The pattern can consist of any Maribozu candle, it does not matter. If we talk about usefulness, then this candlestick pattern can be considered quite strong, and the frequency of its formation is not too high. The appearance of the “Maribozu” pattern on the price chart signals the readiness of the bulls or bears for action.
Types of pattern "Maribozu"
Depending on the color of the body of the candle, two types of patterns are distinguished: bullish marubozu and bearish marubozu. Sometimes you can see the name "Brothers of Maribozu", which indicates the presence of two types of this pattern: bullish - a white candlestick and bearish - a black candlestick. Figuratively speaking, one brother is trying to move the market up (“Bullish Maribozu”), and the other, on the contrary, wants to send quotes down (“Bearish Maribozu”).
Bullish Maribozu
The pattern is a large white candle and indicates the readiness of the bulls to go on the offensive. The place where the pattern is formed on the chart is important. There are two main scenarios that are used for trading:
Reversal after decline - the pattern forms at the lows of the price chart during a downtrend, in which case it acts as a reversal pattern. The appearance of "Maribozu" indicates that the bears have reached a strong support level and the bulls, having gained strength, are trying to move from it to the counterattack, which can cause an upward correction or even a trend reversal.
Breakdown of resistance - the pattern appears during an uptrend or when the price goes up from the sideways range. Here, "Maribozu" is an example of a continuation of the trend. The bulls have reached a strong resistance level and after some consolidation they confidently break through it. As a result, we can count on further growth of quotations.
Bearish Maribozu
The pattern consists of a large black candle and signals that the bears are seizing the initiative. As with the bullish pattern, there are two main trading scenarios:
Reversal after growth - the pattern appears at the highs of the price chart after an uptrend, here it works as a reversal pattern. Its appearance at the highs indicates that the bulls have stumbled upon a strong resistance level, and the bears are trying to turn the market down. If they have enough strength for this, then a downward correction or even a reversal may follow.
Support breakout - "Bearish Maribozu" is formed during a downward movement or when quotes exit down from the consolidation zone. Here it works as a downtrend continuation pattern. The bears have reached a strong support level and, gathering their strength, break through it, after which the decline in quotes may continue.
Trading on the "Maribozu" pattern
To trade the pattern, you can use different timeframes and almost any liquid assets with sufficient volatility.
Bullish Maribozu — buy
The bullish pattern trading algorithm is as follows:
A bullish marubozu is forming on the price chart. There is a rebound from the lows after a market fall, or a breakdown of resistance during an upward price movement.
You can buy after a small downward correction or when quotes rise above the high of the white candle. The stop is set behind the low of the pattern.
You can fix Profit when a strong resistance level is reached or after signs of a downward reversal appear.
Bear Maribozu - For Sale
For a bearish pattern, the method looks like this:
A “bearish marubozu” appears on the price chart. There is a rebound from the highs after an uptrend or a breakdown of support during a downward price movement.
You can open a sell after a small upward correction, or when the price falls below the low of the black candle. The stop is placed behind the high of the pattern.
Profits can be closed when falling to a strong support level or when there are signs of an upward reversal.
Recommendations for trading on the "Maribozu" pattern
When using the pattern in trading, you should pay attention to the following:
The body of the candle should be large, stand out clearly on the chart and exceed the size of several previous candles.
For the Maribozu candlestick, you can allow the presence of minimum tails within a few points.
This is a universal pattern, depending on the place of formation, it can be traded both as a reversal model and as a trend continuation model.
The pattern is recommended to be used in conjunction with support and resistance levels from classical technical analysis.
High risks in margin trading should be controlled by placing protective Stop Loss orders.
Conclusion
The Maribozu candlestick pattern is universal - depending on the place of formation, it can portend both a reversal and a continuation of the current trend. This is not a frequent visitor to price charts, but it is a fairly strong candlestick pattern.
This pattern is recommended to be used in conjunction with support and resistance levels; You can also supplement trading with technical indicator signals. Before you start real trading, you should practice on a demo account.