The Marubozu is one of the four basic candles used in chart pattern analysis. One of the strongest variations is the Marubozu Closing White pattern. Here, you will learn how to use this variation as part of your binary options trading strategy.
Using Marubozu Closing White Pattern in Binary Options Trading
There are different variations of the Marubozu but all candles under the Marubozu group have different opening and closing prices, and lack at least one shadow on the upper or lower side of the candlestick.
How to Recognize the Marubozu Closing White Pattern
The Marubozu Closing White Pattern is a bullish formation. It is the opposite of the Black Closing Marubozu pattern. The White Closing Marubozu is an indication of a very strong bullish market.
This candlestick features a long white body with a lower shadow but without an upper shadow. The two defining characteristics of this candlestick pattern are: First, the candlestick has a long white body and second, it does not have an upper shadow.
Overall, the body of this particular candlestick should be longer than other candlesticks appearing on the chart. The candlestick also has a shadow on the opening side but lacks one on the closing side.
The Closing White Marubozu pattern is very distinct given that it lacks an upper shadow. However, the body must cover more than half of the full height of the candle.
How to trade the Marubozu closing white pattern
When a white closing Marubozu pattern forms, it is an indication of a strong bullish market where the buyers are in control of the price action from the first to the last trade.
Several events characterize the formation of this pattern—at the opening of the trade day, the prices decline slightly to form a lower shadow. Soon afterwards, the prices start to rally and go below the opening price, a trend that goes on the entire day so that the closing price is at the same level as the highest price of the day. This pattern forms when the bulls start weakly but become increasingly strong for the rest of the day or trading session.
The Marubozu White Closing pattern is generally a bullish formation. Even then, it is important to pay attention to the position on the chart where the pattern forms. When the pattern forms after a prolonged decline in prices, it could be an indication of an impending reversal in the trends given that the prices would have reached a certain support level. On the other hand, if the pattern forms after a considerably prolonged rally in prices, it could be an indication of too much bullishness in the market. The formation also indicates that prices have risen to exceedingly high levels.
Remember that the position where the candlestick appears is important and will have implications for your trading strategy. When the pattern forms in an upward trend, you will see that the close price and the high price are at the same level, therefore the lack of an upper shadow.