How to Use Red and Green Marubozu Candlesticks in Trading

Hi friends. When trading in the Forex market, we try to predict where prices will go. Technical and fundamental analysis methods help us in this. Japanese candlesticks are very popular in technical analysis. By understanding the structure of candlesticks, we can create our own strategy. Among the candlesticks, the most eye-catching is known as Marubozu. In our article today, we will talk about the meaning, structure, and how to trade Marubozu candlesticks.

What Is a Marubozu Candle?

A Marubozu candle is a full-bodied candlestick with no shadows at the top or bottom. It shows that the price moved in one clear direction during the whole period. A Bullish Marubozu means buyers kept pushing the price up until the end, while a Bearish Marubozu means sellers stayed in charge from start to finish. Candlestick analysts regard it as a direct reflection of strong buying or selling power.

Meaning of the Term Marubozu

"Marubozu" comes from the combination of the Japanese words "maru" (丸), meaning "round" or "full," and "bozu" (坊主), meaning "monk" or "bald." The name is attributed to the shape of the Marubozu candlestick, which has a full body due to the absence of upper and lower wicks.

The Marubozu candlestick pronunciation is mah-roo-boh-zoo. Hearing and saying the Marubozu candlestick pronunciation the right way makes the term sound more natural when reading trading resources or watching market videos. It also helps the word feel easier to remember and use in daily trading talk. Knowing the correct Marubozu candlestick pronunciation allows the trading community to discuss Japanese candlestick terms with more confidence and clarity within the financial ecosystem.

Therefore, it is natural to interpret "Marubozu" as "long body." However, in some sources, it is also referred to as "bald head" because of the absence of wicks, which resembles a bald head. In other sources, it is translated as "close-cropped" or "short-cut" and even "cut log." In conclusion, "Marubozu" can be interpreted as meaning "long body," "close-cropped," or "bald head" in Japanese, and all of these interpretations reflect the characteristics of the Marubozu candlestick. Remembering both the meaning and the Marubozu candlestick pronunciation makes it easier to connect the word's origin with the visual form of the candlestick.

Types of Marubozu Candles

There are two main Marubozu candle types — the Bullish Marubozu and the Bearish Marubozu. Each one shows a clear price direction. Specifically, its structure confirms a maximum range of movement from open to close, with virtually zero reversal during the session. During this movement, there are no upper or lower shadows (wicks). Marubozu candlesticks represent a strong price movement, especially within a single day. These can help us assess market trends and predict future price movements of stocks. There are two main types of Marubozu candlesticks:

1. Green (or White) Marubozu

This is a long-bodied candlestick with the opening price at the lowest level and the closing price at the highest level. It generally indicates that buyers are strong and the bulls are in control of the market. Green Marubozu can be interpreted as a sign that prices are likely to continue to rise. Green (or White) Marubozu is known as a Bullish Marubozu. A Bullish Marubozu shows strong buying interest and often appears at the beginning of an upward move. When seen after a downtrend, a Bullish Marubozu may signal that the market is starting to turn upward.

2. Red (or Black) Marubozu

A Red (or Black) Marubozu is a long-bodied candlestick where the opening price is at its highest and the closing price is at its lowest. It shows strong selling activity and that bears are in control of the market. A Red Marubozu can be seen as a sign that prices may keep moving down. Red (or Black) Marubozu is known as a Bearish Marubozu. A Bearish Marubozu often appears when sellers stay active for a long time. It can also show that the market mood is weak and the bearish trend may continue for a while.

Marubozu Candlesticks

Both types of Marubozu appear when there is a sharp and pronounced price movement. This indicates that there is a strong trend in the market during the time period the candlestick is formed, or that the trend is about to reverse.

What Does a Marubozu Candlestick Indicate?

A Marubozu candlestick shows clear strength in one direction. A Bullish Marubozu candlestick means buyers were strong from the start to the end of the session, and the price kept rising without pulling back. A Bearish Marubozu candlestick means sellers led the whole time, and the price kept falling with no pause.

How reliable is the Marubozu pattern?

The Marubozu pattern can be helpful, but it should not be used alone. It works better when it appears near support or resistance levels or when it matches the main market trend. Traders often look at other candlesticks or tools to confirm its signal before making a move.

How to Trade Marubozu Candlesticks

Marubozu candlesticks are simple yet effective technical analysis tools that can be used to trade on their own. They can help us determine the direction of the trend in the market. This means that they can give us clues about whether the trend is likely to continue or if it is about to reverse. When trading in financial markets, it is important to consider the formation time and body size of the Marubozu candlestick. If the candlestick forms at the beginning or within the trend, the larger the body, the stronger the trend.

A Green Marubozu is a type of candlestick that indicates an upward price movement. Opening a long position when this candlestick forms can be an opportunity to profit from rising prices. If it appears at a support level, it suggests a possible trend reversal or the beginning of a new trend. For example, take a look at the daily chart of the US500 index:

A Bullish Signal with Green Marubozu

The image above shows a clear Marubozu candlestick example on the daily chart. In this Marubozu candlestick chart, the strong green body signals that buyers were in control for the entire session. Traders often use this type of chart to spot entries or confirm that an upward trend is continuing. Watching for similar patterns in other Marubozu candlestick chart setups can help identify emerging opportunities in different markets.

Red Marubozu is a candlestick that signals a price drop. During the time this candlestick forms, it can be an opportunity to open a short position to take advantage of the price drop. Especially, if it is seen at a resistance level, it indicates that the current trend is about to reverse. Example: Look at the NASDAQ daily chart:

A Bearish Signal with Red Marubozu

The picture above is a simple Marubozu candlestick example. On this Marubozu candlestick chart, the long red candle shows the price dropped steadily during the session. This type of candle is easy to spot and shows a clear direction. Seeing these candles appear a few times can help us understand how the price is moving.

Remember, it is very important to not forget risk management when trading. It is necessary to determine stop-loss and take-profit levels in trades based on Marubozu candlesticks. Stop-loss limits our losses when we need to reverse the trade. Take-profit helps us to determine our profit targets. While using Marubozu patterns, we can confirm the signals by using other technical analysis tools and indicators. For example, we can get more information about the market situation by using indicators such as moving averages, RSI, or MACD.