Written and copyright © 2008-2014 by Thomas N. Bulkowski. All rights reserved.
In my book,
Encyclopedia of Candlestick Charts, pictured on the right,
I explore the entire range of candlestick patterns from abandoned babies to windows (not exactly A to Z, but you get the idea), in both bull and bear markets, using almost 5 million candle lines
in the tests.
The book takes an in-depth look at 103 candlestick patterns and reports on behavior and rank (3 types: reversal rate, frequency, and overall performance), identification guidelines,
performance statistics (tables of general statistics, height, and volume), trading tactics (tables of statistics on reversal rates and performance indicators),
and wraps each chapter with a sample trade. I share a sliver of that information below. If you like what you read here, then you will love the book. Help support this website and buy a copy
by clicking on the above link.
The black marubozu candlestick, along with the other variety of marubozu candles, have been given more weight by candlestick followers than I think they deserve. The black marubozu
acts as a continuation candle 53% of the time, which I consider "near random." The performance after the breakout ranks just 57 out of 103, where a rank of 1 is for the best performance.
The tests show not much benefit from this candle, despite what others may claim.
Important Results for Black Marubozu's
Theoretical performance: Continuation
Tested performance: Continuation 53% of the time
Frequency rank: 30
Overall performance rank: 57
Best percentage meeting price target: 78% (bull market, up breakout)
Best average move in 10 days: 5.33% (bear market, up breakout)
Best 10-day performance rank: 24 (bull market, up breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.
The above numbers are based on hundreds of perfect trades. See the glossary for definitions.
Black Marubozu Discussion
The black marubozu is a tall black candle with no shadows. Theory agrees with reality in that the candle acts as a continuation of the prevailing price trend, but I found that behavior
is almost random: 53% of the time it acts that way. The black marubozu occurs frequently, ranking 30 where 1 is as plentiful as traffic jams during rush hour.
The best average move 10 days after the breakout is 5.33%, which is quite good. That occurs after an upward breakout in a bear market. However, the best 10 day performance rank (24)
occurs during a bull market after an upward breakout. I find both of those numbers interesting given that the marubozu closes at the low for the day. Price has to push higher and
breakout above the top of the candle and then continue rising to meet those gains. Perhaps this is an example of growing upward momentum after a reversal of the downtrend.
Black Marubozu Identification Guidelines
|Number of candle lines||One.|
|Price trend leading to the pattern||None required.|
|Configuration||A tall black candle with no shadows.|
Three Trading Tidbits for Black Marubozu
If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book
where the tips appear.
- Black marubozu candles within a third of the yearly low perform best -- page 506-507.
- Use the price trend leading to the candle to predict the likely breakout direction -- page 508.
- A black marubozu in an identical three crows candle pattern makes for an interesting trading setup -- page 509-510.
Black Marubozu Example
The black marubozu candle, shown here at A, is a tall black candlestick with no shadows. This one happens in a downward price trend and
price breaks out downward, too. A downward breakout occurs when price closes below the bottom of the candle, which occurs the next day in this example.
Since the closing price
on the day the black marubozu forms is at the bottom of the candle, you would expect the breakout to be downward, and it is. However, upward breakouts occur 34% of the time in
the 19,993 black marubozu candles I looked at.
Look for the best performance from a black marubozu when price trends downward leading to the candle. Both reversals (upward breakouts) and continuations (downward breakouts)
perform better than a black marubozu in an up trend.
-- Thomas Bulkowski
Copyright © 2008-2014 by Thomas N. Bulkowski. All rights reserved. Dyslexic's are teople poo.