Stock Analysis Using White Marubozu

The white marubozu candlestick pattern is a long white body with no shadow on either end and is an extremely strong pattern when you consider how it is formed during stock analysis. It opens on the low and immediately heads up. It continues upward until it closes, on its high. Counter to the black marubozu, used in Japanese candlesticks, it is often the first part of a bullish continuation pattern or bearish reversal pattern. It is called a Major Yang or Marubozu of Yang during stock analysis with candlestick charts.

white marubozu

The white marubozu candlestick pattern signifies the formation of positive sentiment which makes the price continue to rise from opening until closing. It is then that the lowest price is equivalent to the opening price and the highest price is equivalent to the closing price.

When the white marubozu occurs during stock analysis, it signifies that the day consisted of aggressive buying wherein the buyers were in control. This indicates that buying could continue to occur the following day as well. Furthermore, if over the next few days the price does not dip below the low of the marubozu that you previously used for the buy signal, then some might say that this indicates that the buy signal is indeed legitimate.

Japanese Candlestick trading signals consist of approximately 40 reversal and continuation patterns used in stock analysis. All candlestick patterns have credible probabilities of indicating correct future direction of a price move. The shooting star candlestick is one of the 12 major patterns used in candlestick charting. The definition of “major” has two functions. Major in the sense that they occur in price movements often enough to be beneficial in producing a ready supply of profitable trades. They also clearly indicate price reversals with strength enough to warrant placing trades.

Continue to learn more about the major candlestick signals and read about the Inverted Hammer signal that is used in stock analysis and other types of analysis.

 

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Chart Analysis – Marubozu

In Japanese, Marubozu means close cropped or close-cut and this candlestick pattern has no upper shadow and no lower shadow. The real body of this pattern could be short or long as well as black or white. Its meaning reflects the fact that there are no shadows extending from either end of the body and it exhibits a strong trend within a specific amount of time. Bald or Shaven Head are more commonly used in candlestick chart analysis. During chart analysis using candlestick charts, the marubozu is more relevant when it occurs at a breakout point and it can also occur anywhere on a chart.

As stated above, the marubozu can be a white or black candlestick and it indicates trending markets that are created when supply and demand rules the market. Again, the marubozu may appear at any time when candlestick charting, however due to the nature of this candlestick, the marubozu provides more meaning when occurring at the breakout. During chart analysis, The black marubozu candlestick is formed as a long black body that is strong during a downtrend and indicates that supply is more than demand while the white marubozu candlestick is formed as a long white body that is strong during an uptrend and indicates demand is more than supply.

The psychology built into a major candlestick signal is simple common sense investment philosophy. When you learn how to utilize the candlestick signals correctly during chart analysis you now have the knowledge to improve your trading techniques for those trading entities you want to trade. You do not have to depend on canned programs that sometimes work and sometimes don’t work and you do not have to buy or sell stock recommendations blindly based on a research analyst’s recommendations.

The candlestick signals provide guidance as to what investors are actually doing at a certain point in time. Learn the 12 major candlestick patterns as well as the secondary patterns and your investments perceptions will greatly improve.

Continue to learn about candlestick signals and chart analysis and read about the Dark Cloud Cover.

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Candlestick Charts – Short Days

When analyzing candlestick charts, short days can be interpreted by the same analytical process as the long candles. (See candlestick charting – long days). There are a large percentage of the trading days that do not fall into either of these two categories. The short day pattern is short in length but is not necessarily named for its relation to the duration of a trade. The short day candlestick pattern consists of only one candlestick and it opens and closes inside of the preceding candlestick’s range. It is entirely contained by the previous candlestick and it is neither bullish nor bearish.

short days

When using candlestick charts it is important to know that the short day pattern can occur in a variety of situations. For example short day patterns can occur during a trend, at the end of a trend and at the beginning of a trend as well. When alone, it only signifies a small range and that the time period was neither bullish nor bearish. Due to this, the short day pattern is not really used as a trade entry or exit pattern but instead is encompassed in other candlestick patterns. This provides those candlestick patterns with more relevance. It can also convey the upcoming price movement when using candlestick charts.

Recognizing and understanding the psychology behind candlestick charts will provide completely new insights for investors to understand optimal times to buy and sell. Japanese rice traders realized that prices do not move based on fundamentals but instead that they move based on the investor perception of those fundamentals.

The psychology built into a major candlestick signal is simple common sense investment philosophy. When you learn how to utilize the candlestick charts correctly you now have the knowledge to improve your trading techniques for those trading entities you want to trade. You do not have to depend on canned programs that sometimes work and sometimes don’t work and you do not have to buy or sell stock recommendations blindly based on a research analyst’s recommendations. The candlestick signals provide guidance as to what investors are actually doing at a certain point in time. Learn the 12 major candlestick patterns as well as the secondary patterns and your investments perceptions will greatly improve.

Continue to learn about candlestick patterns and read about the Dark Cloud Cover, the hammer signal, the bearish engulfing, and others.

 

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Candlestick Charting – Long Days

For candlestick charting, a long day represents a large price move from open to close and “long” represents the length of the candle body and is not related to the length of the actual trade. What qualifies a candle body to be considered long? That is a question that has to be answered relative to the chart being analyzed. The recent price action of a stock will determine whether a “long” candle has been formed when candlestick charting. Analysis of the previous two or three weeks of trading should be a current representative sample of the price action.

long days

 

When candlestick charting, the long day pattern is bullish or bearish and is contingent upon on whether the time period involved mainly bullish or bearish trading. The long day is one of the single candlestick patterns that opens and closes outside of the previous candlestick’s range. Therefore it completely contains the previous candlestick within its length

The long day pattern can occur in a variety of different situations. For example, when candlestick charting, a long day pattern may occur at the end of a trade, during a trend, or at the beginning of a trend. Therefore, the long day is not often used as a trade entry or exit pattern. The long day is also contained within other candlestick patterns to provide more relevance and also to offer a signal for the upcoming price movement.

Candlestick patterns are clear and easy to identify demonstrating highly accurate turns in investor sentiment. Japanese candlestick patterns consist of approximately 40 reversal and continuation patterns which all have credible probabilities of indicating correct future direction of a price move. However the twelve major candlestick patterns provide more than enough trade situations to most investors. There are only twelve major patterns that should be committed to memory but this does not mean that the remaining secondary patterns should not be considered. In fact those signals are extremely effective for producing profits. Reality however demonstrates that some of them occur very rarely when candlestick charting.

The average investor does not have to be dependent on the investment professional when candlestick charting. Professional recommendations are not always in your best interest at the forefront. Whether totally unfamiliar with investment concepts or very sophisticated in investment experience, the Japanese Candlestick trading formations are easily utilized. The signals and patterns are easy to see and their interpretations are reliable.

Continue to read about the Doji which is one the most revealing candlestick signals.

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