Trading Technique

Different shapes of the candlesticks

Typical candlesticks & Marubozu
Doji
Hammer and Hanging Man & Shooting Star
High Wave & Engulfing Pattern
Dark Cloud Cover
Piercing Line

Harami
Morning and Evening Star and Abandoned Baby

Tweezers

1. Typical candlesticks:
All of the four prices are different from each other. A typical candlestick can be Bullish or Bearish.
Typical Candlesticks

2. Marubozu:
Marubozu means shaven. The candlesticks that have no shadow are called Marubozu.


What does Marubozu mean in the market?
In Bullish Marubozu, the open price is the same as the low price and the close price is the same as the high price. Bullish Marubozu means that Bulls are so strong and didn’t let the Bears take the price down when the candlestick became completed. It means there is a lot of buying activity in the market. The longer the candlestick, the stronger the Bulls.

In Bearish Marubozu, the open price is the same as the high price and the close price is the same as the low price. A Bearish Marubozu means that Bears are strong and there is a lot of sell activity in the market specially when the Bearish Marubozu is longer than the previous candlesticks.

What does it mean in general?
1. When you see a Bullish Marubozu, you should not take a short position because the Bulls are strong and the price can go higher.
2. When you see a Bearish Marubozu, you should not take a long position.
3. When you see a Bullish Marubozu at end of a downtrend, it is a reversal signal. You can just wait for the next candlestick and if it is Bullish too, you can take a long position.
4. When you see a Bearish Marubozu at end of an uptrend, it is a reversal signal. You can just wait for the next candlestick and if it is Bearish too, you can take a short position.
5. If you already have a long position and you see a Bearish Marubozu at the end of the uptrend, you should close your position and take your profit.
6. If you already have a short position and you see a Bullish Marubozu at the end of the downtrend, you should close your position and take your profit.

Of course we will take about the candlesticks patterns and you will learn more about taking the right decision when you see different kinds of candlesticks but by now, just keep in mind that Bullish/Bearish Marubozu means the Bulls/Bears are strong.