How to Trade the Marubozu Pattern in Forex

How to Trade the Marubozu Pattern in Forex

How to Trade the Marubozu Pattern in Forex

Candlestick charts are by far the most popular chart type technical traders use today. They visually represent investor sentiment in a much clearer way than line bar charts would, for example.

Because candlesticks represent investors’ behavior over a certain period, they tend to form repetitive patterns that often forecast a change in price direction, or a potential trend continuation. There are many candlestick patterns that have been clearly documented; some of them go by unusual names such as ‘dark cloud cover’, ‘three black crows’, or ‘spinning top’.

In this article, we will explore a very popular candlestick pattern: the Marubozu forex pattern, what seeing it on your chart means, and how to trade it.

What is the Marubozu Forex Pattern?

01 Marubozu Pattern ILLUSTRATION

Image for illustrative purposes only

‘Marubozu’ is a Japanese word meaning ‘close-cropped’, referencing a candlestick with little to no wick.

A Marubozu forex pattern can appear in both a bullish and bearish trend and comprises a single candlestick with a long body. There are three Marubozu pattern variations: the Marubozu full, Marubozu open, and Marubozu close.

When a candle closes with a long body that has no upper or lower wick, it is referred to as a Marubozu full. A Marubozu open candlestick has no wick at the opening end, but can have a small wick at the closing end. The Marubozu close candle has a small wick at the opening end, with no wick at the closing end.

What Does the Marubozu Forex Pattern Mean?

02 What is the Marubozu Forex Pattern

Image for illustrative purposes only

The chart example above shows four instances (with all three Marubozu pattern variations) where a bullish forex pattern formed during an uptrend.

When a bullish Marubozu forex pattern appears on a chart, it strongly indicates there is more demand than supply for a currency, which typically leads to a strong price rise.

03 What Does the Marubozu Forex Pattern Mean

Image for illustrative purposes only

This next chart example shows two instances where bearish Marubozu close patterns appeared after periods of temporary price consolidation that led to strong price declines.

When a bearish Marubozu forex pattern forms, it is a reliable indication there is more supply than demand present in a market, and a bearish trend continuation is likely to follow.

How to Trade the Marubozu Forex Pattern

The following is a simple strategy for trading the best Marubozu forex pattern set-ups, with additional volume indicator confirmation.

04 How to Trade the Marubozu Forex Pattern

Image for illustrative purposes only

The example above shows the same bullish Marubozu patterns as before, with a volume indicator added to the chart’s lower panel. Traders will often use additional confirmation methods to trade forex candlestick patterns, rather than relying on the pattern on its own. Doing this can help traders identify the Marubozu forex patterns that may lead to the highest probability trade set-ups.

The volume indicator is a good additional confirmation method when trading the Marubozu pattern because it will clearly show you whether the Marubozu candlestick is accompanied by an increase in volume. The more volume present after a Marubozu candle closes, the better the chances the bullish momentum will continue.

Note the green bars (marked with yellow ovals on the lower chart panel) are showing a clear increase in volume — higher than the preceding candlesticks — each time a Marubozu candle formed.

In instances where a Marubozu candlestick appears without a clear increase in volume, you may be dealing with a false breakout, which may lead to a reversal that can stop out your trade position.

05 How to Trade the Marubozu Forex Pattern

Image for illustrative purposes only

Now that we know what the Marubozu forex pattern looks like and how to apply the volume indicator as additional confirmation, we can proceed to the trade entry and order placement step of this strategy.

Once the pattern has been confirmed, a buy order can be placed a few pips (or increments) above the green Marubozu candle’s high. A stop-loss order can be placed a few pips below the same candlestick, and a target order at a level that will offer double the reward versus the risk taken on this trade.

All four of the bullish Marubozu forex patterns shown above resulted in profitable trades; this illustrates the effectiveness of this pattern when used in combination with the volume indicator.

06 How to Trade the Marubozu Forex Pattern

Image for illustrative purposes only

Our previous bearish Marubozu examples are above; here, too, there was a visible increase in volume after the Marubozu candles closed, which was also higher than the consolidation phase volume. This is exactly what traders want to see before they decide to place their trade orders.

07 How to Trade the Marubozu Forex Pattern

Image for illustrative purposes only

After both the bearish Marubozu forex patterns were confirmed, a sell order was placed a few pips below the red candle, and a stop-loss a few pips above it. A target order was again placed at a level that offered double the reward potential versus the risk taken on this position.

Once these bearish positions were filled, price rapidly declined, and both targets were reached in quick succession.

Conclusion

The popular Marubozu forex pattern tends to appear during a strong trending environment where either the buyers or the sellers in a market are in clear control.

In the trade examples shown above, we used the volume indicator to help us identify the Marubozu forex patterns that may generally lead to the highest probability trend continuation set-ups.

Other indicators such as the Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), or Fibonacci ratios may also be useful to confirm the best Marubozu forex pattern set-ups, but using the volume indicator with the strategy above should provide you with adequate tools and knowledge to trade this powerful candlestick forex pattern.

Trade Candlestick Patterns with Top Forex Brokers

Broker Features Regulator Platforms Next Step
Number One Broker tickmill_logo-173 % of retail CFD accounts lose money Founded: 2014
73 % of retail ...
  • Ultra-fast execution from 0.1s
  • Low spreads from 0.0 pips
  • All trading strategies allowed
FSA SC MetaTrader 4, Web Trader
BlackBull Markets LogoYour capital is at risk Founded: 2014
  • Leverage Up To 500:1
  • $200 Min Deposit
  • 60+ Tradeable Instruments
FSPR MT4
Your capital is at risk Founded: 2006
Europe* CFDs ar...
  • 40% New Member Bonus
  • Regulatory licenses across 5 continents
  • 24/7 trading
ASIC, FSA, FSB, MiFID MetaTrader4, Sirix, AvaOptions, AvaTrader, Mirror Trader
Between 74-89% of CFD traders lose Founded: 2010
Between 74-89 % of retail investor accounts lose money when trading CFDs
  • Four user-friendly trading platforms
  • Consistently rater No1 for Trader Support
  • Set up by traders, for traders
ASIC, FCA MetaTrader 4, MetaTrader 5, cTrader
Your capital is at risk Founded: 2020
  • Impressive range of trading platforms
  • Tight spreads and low commissions
  • Excellent customer services
  • STP and ECN trade execution
- Pro Trader, MT4, MT5
vantage logoYour capital is at risk Founded: 2009
  • Leverage up to 500:1
  • $200 Min Deposit
  • Spreads from 0.0
CIMA MetaTrader 4, MetaTrader 5, WebTrader
LegacyFX LogoYour capital is at risk Founded: 2012
  • Meta Trader 5 Trading platform
  • Exclusive professional trading tools
  • Dedicated support staff during all trading hours
BaFin, CySEC, FCA, NBRB, VFSC MetaTrader 5
AdroFX LogoYour capital is at risk Founded:
  • Crypto deposits possible
  • Bonus offers
  • Leverage up to 1:500
  • MT4 and Allpips platforms
FSA, VFSC MetaTrader 4, Web Trader, Social Trading Allpips, Web Platform Allpips
Your capital is at risk Founded: 2000
  • Good range of assets, such as CFDs
  • Fully regulated brokerage
  • Multi-lingual reporting
DFSA, FCA, FINMA, MFSA, only EU traders), SFC FCA (Swissquote LTD MT4, MT5, AdvancedTrader
Trade360 LogoYour capital is at risk Founded: 2013
  • Over 200 Tradeable Accounts
  • $50 no deposit bonus
  • Trading Central Insight Portal
CySEC CrowdTrading
Oanda Logo77% of retail CFD accounts lose money Founded: 1996
  • No Minimum Deposit
  • Over 100 instruments
  • Web, desktop, mobile platform and MT4

ASIC, FCA, IIROC, MAS fxTrade, MT4
vt markets logoYour capital is at risk Founded: 2016
ASIC, CIMA MT4
Your capital is at risk Founded: 2015
  • $50 Min Deposit
  • Flexible Leverage
  • Low Min Order Values
FCA, SCB MT4
Your capital is at risk Founded: 1991
73.05% of investors lose money when trading CFDs with FXCM
  • Enhanced Execution and pricing.
  • Award-winning trading platform
  • Free Access to Exclusive Trading Tools
- FXCM Trading Station (Web, Desktop, Mobile), FXCM MetaTrader 4, NinjaTrader
city index new75% of clients lose money. Capital at risk. Founded: 1983
  • Exceptional customer service
  • Beginner-friendly
  • Free Webinars
ASIC, FCA, MAS Advantage Web, AT Pro, MT4, WebTrader
Exness LogoYour capital is at risk Founded: 2008
  • Instant automated withdrawals 24/7
  • Commission-free Standard accounts
  • Some of the lowest spreads on the markets and stable execution
  • Unlimited leverage
  • Free VPS Hosting
CySEC, FCA, FSA, FSCA MT4, MT5, WebTerminal
Your capital is at risk Founded: 2017
FSC XOH, MT5,
SquaredFinance LogoYour capital is at risk Founded: 2016
CySEC
fusion markets logoYour capital is at risk Founded: 2017

Lowest Commissions in Australia

$4.50 per lot RT

ASIC, VFSC MT4
Your capital is at risk Founded: 2012
Trading in Forex/ CFDs and Other Derivatives is highly speculative and carries a high level of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent advice if necessary. Speculate only with funds that you can afford to lose.
  • High leverage.
  • Variety of trading tools.
  • Multilingual support.
  • Excellent range of educational tools
  • Leverage up to 1:1000
  • Spreads from 0.3 Pips
  • Only a $10 minimum deposit
FSA, FSC MT4, MT5, WebTrader, Proprietary Mobile App

    Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.