How to trade when you see the Marubozu pattern?

The color of the candlestick shows that either the sellers or buyers have full control of the market. The style of trading will vary depending on the type of marubozu. Before entering a trade, it is advisable for you to wait for another confirmation pattern or candle.

Trading with Bullish Marubozu

The absence of a lower and upper shadow in a bullish marubozu indicates that the low price is the same as the open price and the high price is equal to the close price. Therefore, when you see a candle with open=low and close=high, that is called a bullish marubozu.

This kind of candlestick shows that there is so much buying interest in the stock or the market participants are willing to buy the stock at any price during that trading session. Hence, the price of the stock closed near the high point for that session. If the bullish marubozu is shown at an uptrend, this strongly implies a trend continuation. But when it appears in a downtrend, it shows a trend reversal, that the sentiment of the market has changed and the stock is now bullish. 

It is expected that when this sharp change happens, there will be a surge of bullish patterns that are likely to persist over the next trading sessions. Therefore, a trader should look for buying opportunities after the occurrence of a bullish marubozu. It is suggested that the buy price is slightly above the closing price of the bullish marubozu.

Trading with Bearish Marubozu

A bearish marubozu shows that the high price is equal to the open price and the low price is equal to the close price. Therefore, when you see a candle with open=high and close=low, that can be called a bearish marubozu.

This shows that the sellers are in total control of the market. There is so much selling pressure on the stock that the participants of the market are willing to sell the stock at any point during the trading session. Hence, the price of the stock closed near the low point for the session. If the bearish candlestick appears in a downtrend, it means a strong trend continuation. But if it appears in an uptrend, it works as a trend reversal pattern, that is, the sentiment of the market has changed and the stock is now bearish.

It is expected that with this sharp sentiment change there will be a surge of bearishness and it will continue over the next few trading sessions. Therefore, a trader should look for opportunities to sell after the occurrence of a bearish marubozu. The suggested selling price is slightly below the closing price of the marubozu.