When studying Japanese Candlesticks it is important to know about the black marubozu. The black marubozu is a long black body with no shadows at either end. It is considered a weak indicator. It is often identified in a bearish continuation or bullish reversal pattern, especially if it occurs during a downtrend. A long black candle could represent the final sell off, making it an “alert” to a bullish reversal setting up. The Japanese often call it the Major Yin or Marubozu of Yin. Ideally you would not want to have any small wicks on either end of the black candlestick but it is possible and would signify that the open and the close were close to the high and low price of the day.
Some who study Japanese Candlesticks also refer to the black marubozu as the bearish long black candle and it is the opposite of the bullish white marubozu candlestick pattern. Again, this long black candle signifies that a bearish trend is occurring and the sellers are in control in which the sellers end the day selling pretty low. So basically, Japanese candlesticks tells us that, if the price opens at the high of the day and it closes at the low of the day, then the outcome is the black marubozu. In order to confirm that this signal is valid, you need to watch it over the next few days.
The psychology built into a major Japanese candlesticks signals 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.
