The Marubozu is one of the strongest candlestick signals. Marubozu literally means ‘bald’ because the candlestick has few or no lower or upper wicks.
How to Use Opening Black Marubozu pattern in Binary Options Trading
Here you will learn about a variation of the Marubozu, the Opening Black Marubozu pattern, and ways to use it as part of your binary options trading strategy!
How does the Opening Black Marubozu pattern form?This pattern is also known as the Bearish Long Black Candle or the Bearish Black Marubozu pattern. It is the opposite of the Bullish White Marubozu pattern.
The pattern forms when the price opens at a high and closes at a low. A long black candlestick characterizes the pattern, which is an indication that the sellers are in control and that a bearish trend is prevailing. The market is the most bearish when the candle is especially long.
Ideally, a long black candle would not have wicks at the top or bottom. However, sometimes, very small wicks form on either end of the candle; this is an indication that the open was near the high price of the day and the close was near the low of the day.
How to confirm an Opening Black Marubozu pattern
When you spot a long black candlestick, it is important to confirm that it is a valid signal to trade. The signal is valid if the price of the underlying asset falls below the low point of the Marubozu. On the contrary, the signal would not be valid if the price of the underlying asset does not fall below the low point of the Marubozu.
It is recommended that you place a stop-loss order right below the high level of the Marubozu. This allows you to exit the trade without incurring major losses, in case the signal is not valid.
Trading the open Black Marubozu signal
The formation of the Opening Black Marubozu signal is an indication that sellers were in control by the close of the day and there was intense selling. Given that the selling was aggressive, it is likely that this trend will carry on into the next day. These conditions present an ideal opportunity to sell the underlying asset.
Variations of the Marubozu candlestick pattern
The Opening Black Marubozu pattern is not the only variation of this pattern. Some variations have small wicks at either end of the candlestick. These variations include:
The White Marubozu - When this pattern forms in an uptrend, it is an indication of a likely continuation of a price trend. When the pattern forms in a downtrend, it is an indication of a likely reversal.
A Black Marubozu - When this pattern forms in a downtrend, it confirms a continuation of the downward movement. When it forms in an uptrend, it is a strong signal of an impending reversal and the end of a trend. The black Marubozu has three variations: the black Marubozu without any wick at the top or bottom of the wick, the opening black Marubozu with a wick at the bottom and the closing black Marubozu with a wick at the top and none at the bottom.
In summary, the Opening Black Marubozu is a bearish signal and a strong indicator. When the price of the underlying asset rises above the low point of this pattern, it is a strong selling indication. Be sure to get a confirmation to make the most of this candlestick formation.