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Maruboza

In Japanese, Marubozu means close cropped or close-cut. Bald or Shaven Head are more commonly used in candlestick analysis. It's meaning reflects the fact that there are no shadows extending from either end of the body.


White Maruboza




The White Marubozu is a long white body with no shadows on either end. This is an extremely strong pattern. Consider how it is formed. It opens on the low and immediately heads up. It continues upward until it closes, on its high. Counter to the Black Marubozu, it is often the first part of a bullish continuation pattern or bearish reversal pattern. It is called a Major Yang or Marubozu of Yang.


Black Marubozu




A long black body with no shadows at either end is known as a Black Marubozu. It is considered a weak indicator. It is often identified in a bearish continuation or bullish reversal pattern, especially if it occurs during a downtrend. A long black candle could represent the final sell off, making it an "alert" to a bullish reversal setting up. The Japanese often call it the Major Yin or Marubozu of Yin.


Closing Marubozu




A Closing Marubozu has no shadow at it's closing end. A white body will not have a shadow at the top. A black body will not have a shadow at the bottom. In both cases, these are strong signals corresponding to the direction that they each represent.



Opening Marubozu




The Opening Marubozu has no shadows extending from the open price end of the body. A white body would not have a shadow at the bottom end , the black candle would not have a shadow at it's top end. Though these are strong signals, they are not as strong as the Closing Marubozu.


BEARISH PATTERNS AFTER AN UPTREND
Abandoned Baby


• Direction: Bearish
• Type: Reversal
• Reliability: Strong




• Day-one is a blue day.
• Day-two is a doji or small candle.
• Day-three is a large red day.


The Abandoned Baby is a rare bearish reversal pattern characterized by a large move up followed by a doji or small candle, and then a third candle heading in the opposite direction.

The formation reflects a classic three period reversal of market sentiment where after a bullish trend; enough sellers enter the market to take control. They first stop the trends momentum (doji), and then ultimately reverse the direction of the market.

This first bullish move suggests a continuation of the bull market. That move is followed by a doji, where markets trade in a small range suggesting uncertainty in trend and sell off potential. Up to day two we actually have a Doji Star, moderate strength bearish pattern. After the day of indecision, a large bearish candle confirms the sell-off and reversal. The stronger the move down day-three, the stronger the reversal signal. Watch for additional bearish price action in the next few days.

bearish dark cloud cover candlestick


• Direction: Bearish
• Type: Reversal
• Reliability: Strong




• The first day is a long blue day
• The second day will close below the midpoint of the previous candles body


The market continues the uptrend on the first day. By day two sellers take price down to close near the open of the previous day.

In FX, traders view the higher the second day high the better since the bigger the rally after the open, the more sellers were able to drive price back down.

This formation suggests short sellers have begun to take charge of the market, and longs have been shaken by the sudden lost of bullish momentum. Declining days are common after this formation as more short sellers confidently to enter the market with a clear stop benchmark at the second day high.

The deeper day-two closes into the first day candlestick body, the greater the chance of the uptrend topping out. If the second day candle does not trade below the midpoint of the first day body, traders typically feel it safer to wait for confirmation on the third day.



bearish evening star candlestick
Bearish Evening Star (Evening Shooting Star)


• Direction: Bearish
• Type: Reversal
• Reliability: Strong




Evening Stars start with a continuation of the bullish move. The second day sees a continuation of the move up, but a sell-off makes the market close at or near the open for the day. The first two candles meekly suggest a loss of bullish momentum. In fact up to day two this formation matches the Bearish Shooting Star weak-to-moderate strength reversal pattern.

Although the example above is a blue shooting star, the shooting star can really be any color.

Bearish Shooting Stars alone are decent signals for additional sell-offs on day three. Since the certainty for a shooting star indicator is low, the trend reversal should be confirmed by a red candlestick the next day.


bearish three inside down candlestick
Bearish Three Inside Down


• Direction: Bearish
• Type: Reversal
• Reliability: Strong




• Following an uptrend, a long blue day occurs
• The second day is a red day where the body is engulfed by the body of the first
• The third day is a red candle with a lower close than the previous day


During an uptrend a large upward price movement occurs, illustrated by a long blue candlestick. The price is then driven down, as shown by a red candlestick, reversing some of the upward movement from the previous day. The reversal pattern is confirmed with the third days red candle completes the bearish pattern.

bearish three outside down candlestick
Bearish Three Outside Down


• Direction: Bearish
• Type: Reversal
• Reliability: Strong




• After an established uptrend a clear bearish Engulfing pattern occurs (one blue candle and a second bear move that drives price below the prior day low and closes near the bottom of the range)
• The third day is a red day with an even lower close than the second day


In a market characterized by uptrend, day-twos red candle close completely below day-one, engulfing it completely. The first two days are a classic pattern that suggests a sell-off has taken over the market and is breaking the established trend.

This bearish reversal is confirmed by a still lower day on day-three.

BULLISH PATTERNS AFTER A DOWNTREND
bullish abandoned baby candlestick

• Direction: Bullish
• Type: Reversal
• Reliability: Strong


• Day-one is a red day continuing an established bear trend.
• Day-two is a doji whose shadows trades below day-ones close.
• Day-three is a blue day that opens and trades above with little or no overlapping shadows


The Abandoned Baby is a rare bullish reversal pattern characterized by a large down move followed by a doji or small candle, and then a third candle heading in the opposite direction.

The formation reflects a classic three period reversal of market sentiment where after a bearish trend, finally enough buyers enter the market to take control. They first stop the trend's momentum (forming the doji), and then ultimately reverse the direction of the market.

This first red candle suggests a continuation of the bear market. That move is followed by a doji, where markets trade in a small range suggesting uncertainty in trend and a rally potential. Up to day two we actually have a Bullish Doji Star, moderate strength bullish pattern. After the day of indecision, a large bullish candle confirms buyers are staging a rally and reversal. The stronger the move up day-three, the stronger the reversal signal. Watch for additional bullish price action in the next few days.


bullish morning doji star candlestick
Bullish Morning Doji Star


• Direction: Bullish
• Type: Reversal
• Reliability: Strong




• After an established down trending day-one is a long red day
• Day-two is a doji where the open and close are equal.
• Day-three is a blue day


Bullish Morning Doji Stars are a rare reversal pattern that offers one of the strongest bullish reversal signals in the Forex Market. Morning Star formations are characterized by a continuation of a bearish trend followed by a Doji, reflecting uncertainty in the strength of trend.

Up to day two we actually have a Doji Star formation, a moderate strength bullish pattern. After the day of indecision, the trend reversal is confirmed when a rally creates the large bullish candle. The stronger the move up on day-three, the stronger the reversal signal. Watch for additional bullish price action in the next few days.


bullish three inside up candlestick


• Direction: Bullish
• Type: Reversal
• Reliability: Strong




• After an established downtrend, day-one is long red day
• Day-two is a blue day that trades up to the midpoint of day-one
• The third day is a blue day carrying price above the first bearish candle.


Up to day-two we have a simple Bullish Harami pattern. Haramis give a clear-cut formation reflecting buyers overtaking the strength in the downtrend. This formation often precedes a continued rally in price.

With just a Harami pattern, Candlestick analysts will usually wait for additional conformation before entering a long position. The Bullish Three Inside Three formation offers that confirmation.

Additional Confirmation For this candle to take full strength day-threes candle needs to close above day-ones high, creating a new high. The Bullish Three Inside Up formation suggest buyers have seized a degree of control from the bear trend and analysts will watch for buying opportunities to come.


bullish three outside up candlestick
Bullish Three Outside Up


• Direction: Bullish
• Type: Reversal
• Reliability: Strong




• After an established downtrend, day-one continues the trend with a red candle
• Day-two is a long blue day that engulfs the body of the first day, closing well above the previous days open.
• The third day is a blue day with an even higher close than the second day.


The Bullish Three Outside Up pattern is one of the more clear-cut three day bullish reversal patterns. The formation reflects buyers overtaking selling strength, and often precedes a continued rally in price. In fact up to day-two we have a bullish Engulfing Pattern, itself a strong two-day reversal pattern.




BULLISH CONTINUATION PATTERNS

bullish rising three methods candlestick
Bullish Rising Three Methods


• Direction: Bullish
• Type: Continuation
• Reliability: Strong




• In an uptrend, the first day is long blue candle
• The next three days are short red candles, ideally not exceeding the range of day-one
• The fifth day resumes the trend with a long blue candle


The Rising Three Methods bullish continuation pattern occurs in a bull market, where during an uptrend the market rests before resuming the trend. The bullish trends break is reflected by small candles that all stick to a strict market range formed by the aggressive move on day one.



BEARISH CONTINUATION PATTERNS

bearish falling three methods candlestick
Bearish Falling Three Methods


• Direction: Bearish
• Type: Continuation
• Reliability: Strong




• In a downtrend, a long red day occurs
• The second, third and fourth days are short blue days that fall within the range of the first day
• The fifth day continues the downtrend with a long red candle that creates new lows


The Falling Three Methods pattern occurs in a bear market, where during a downtrend the market rests before resuming the trend. The bearish trends break is reflected by small candles that all stick to a strict market range formed by the aggressive move on day one.