Identifying black marubozus

Like the long white candles described earlier in this chapter, there are marubozu versions of the long black candle, which are cleverly called black marubozus. The black marubozu features an open equal to the high and a low equal to the close. Figure 5-16 is a black marubozu, or as my toddler son would say, a black rectangle.

Just like their bullish counterparts, there are three variations of the black marubozu. Figure 5-16 is the first variation, which is a marubozu that opens on its high and closes on its low. The second is the closing black marubozu. You can spot a closing black marubozu by recognizing that there's no wick on the candlestick at the bottom or closing end of the candlestick. The close is equal to the low, while the open is a little bit lower than the high for the day. Figure 5-17 is a closing black marubozu.

Figure 5-16:

A black marubozu.

Figure 5-17:

A closing black marubozu.

The third variation is the opening black marubozu. This pattern is created when the open is equal to the high of a day, and the close is just above the day's low. A small wick appears only on the bottom of this candlestick. Figure 5-18 is an example of a typical opening black marubozu. The appearance of a small wick on the bottom of this candlestick indicates the possibility of some late-day buying or that the low price of the day enticed some buyers. This source of speculation leads some to regard the opening black marubozu as the least reliable of the three black marubozu variations.

Figure 5-18:

An opening black marubozu.

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