Charts 101: The Mighty Marubozu

The name "Marubozu" means "close-cropped" in Japanese. You'll see why the name is fitting after analyzing the details of the candle. The Marubozu is sometimes referred to as “shaven head" or "shaven bottom." The Marubozu is a long candle that either has very short wicks, or no wicks at all, and is considered a clear sign that the overall trading range for the time period was fairly large.

When a stock makes sharp moves higher within a single session, day traders will often take profits near the close, which leaves a small upper wick on the candle. On the flip side, if a stock price falls sharply, a fair amount of short sellers will usually cover before the close of trading, which forms a small lower wick. A white Marubozu indicates extreme conviction among buyers, while a black Marubozu is a signal that sellers were quick to get out.

White Marubozu

The white (or green) Marubozu is identified by its long white body that has no wicks at all. Classified as an extremely bullish candle, it is formed when the day opens and the price continues to rise all day resulting in the formation of a long white (or green) day with no lower wick.

Simply put, a white Marubozu means that the price at the open is essentially the same as the low of the day, in addition to the closing price being the high of the day. This indicates that bulls had control of the price action from the first trade of the day to the last. The trend following is based on the bigger picture. A white Marubozu can be the first part of a bullish continuation pattern, or may signal the reversal of a bearish trend.

Black Marubozu

The black (or red) Marubozu is identified by a long body with no wick. Considered an extremely bearish candle, a black Marubozu indicates that the price continued to fall all day after the open, and the session eventually closed at its lowest price.

The black Marubozu is formed when the opening price is the same as the high of the day and the closing price is the same as the low of the day. This indicates that bears were in control of the price action from the first trade of the day to the last.

Trading the Marubozu

While the Marubozu is considered a clear indicator of bullish or bearish sentiment, it reflects only one session of trading. With the potential to indicate both continuation or reversal, the Maruboza must be considered with other candles and indicators for a trend to be confirmed.