The Marubozu is an excellent pattern when learning how to use candlestick signals in binary options trading. This is a trending pattern and it does not have an upper or lower shadow.
Using the Marubozu Closing Black Pattern In Binary Options TradingThe Marubozu pattern comes in several variations, as both a bearish and bullish pattern. Here, you will learn about one of the variations known as the Marubozu Closing Black pattern and how to use it as part of your binary options strategy.
How to identify the Marubozu closing black patternA Marubozu closing black pattern is a bearish candlestick. In fact, it is an indication of an extremely bearish market. A long black body with an upper shadow but without a lower shadow characterizes this candlestick.
The two distinct characteristics of this candlestick are a long, black body and the second characteristic is that it does not have a lower body. In other words, it has a shadow on the opening side but lacks one on the closing side.
When identifying this pattern it is important to note that the candlestick needs to be longer than the other candlesticks appearing on the chart.
Generally, a closing black Marubozu is a more powerful signal than an opening black Marubozu.
Trading the Marubozu closing black pattern
When the Closing Black Marubozu pattern forms, it is an indication of a very strong bearish market, given that the close price is on the same level as the low price.
This pattern can be either a reversal or a continuation candle, depending on the position on the chart where the candle forms. When it forms in a downward trend amongst other black candlesticks, this could be an indication of a continuation of the prevailing trend. If the pattern forms in an uptrend, it could be an indication of an impending reversal.
The formation of a Marubozu closing black pattern is an indication that sellers were more powerful in the market and they were in control of the price action from the first to the last trade.
Several events on the market can precipitate the formation of the closing black Marubozu pattern. When the day opens and the prices increase slightly, an upper shadow is formed on the candlestick. When the price trend reverses, it goes below the opening level. The decline then continues throughout the day until the closing price is at the same level as the lowest price of the day.
Although the bears start weak at the beginning of the trading session, they become increasingly strong during the day, as the trading session progresses.
The position where this candlestick pattern forms is particularly important. When the pattern forms following an extended price decline, it could be an indication that the bears are panicky and selling their positions in anticipation of a takeover by the bulls.
ConclusionOverall, when this pattern forms, it is an indication that the bears are in control of the day. It could also be an indication of an upcoming bulls market or the continuation of a decline in prices.
However, it is important to use the Marubozu Closing Black pattern with other technical indicators because this candlestick formation alone is not enough to determine the market’s direction given that it mirrors only a single day’s trading.