I have come across many candlestick patterns over the years, but the Marubozu pattern remains somewhat under the radar for most traders. However, it is actually quite valuable when you know what to look for.

The Marubozu is basically a single candle without wicks – it looks like a solid rectangular block. The word comes from Japanese and literally means "shaved head," which makes sense when you look at the shape. What I find interesting about it: this pattern shows you that the price has really moved in only one direction. No hesitation, no counter-movement – pure strength in one direction.

In a bullish variant, the candle opens at the low and closes at the high. In the bearish version, it’s the opposite – open at the high, close at the low. The color tells you which way it went: green or white for bullish, red or black for bearish.

Now to the most important part: where the Marubozu pattern appears in the larger trend makes a big difference. I’ve observed that it typically shows up in three places. First, at the beginning of a new trend – this is the best scenario for a trade. Second, in the middle of a trend, when the bulls finally take control and the bears give up. And third, at the end of a mature trend, which is actually a warning sign that a reversal is imminent.

When I recognize a bullish Marubozu pattern, I first look to see if the price has just jumped above a support line or a moving average. That gives me extra confirmation. For example: on a 2-hour Bitcoin chart, I saw the price jump above the 200-period moving average, followed by a bullish Marubozu. Then the price also broke through a short-term resistance line. These are multiple confirmations indicating a larger upward move.

For a bearish setup, it’s similar. After Bitcoin’s big high in April 2021, the market started to correct. On April 15, the 1-hour Ethereum chart showed a nice bearish Marubozu pattern. The pattern appeared in the middle of the downtrend, after the bulls had already given up. That was a clear signal that the sellers were in control.

How do you trade with it? If the Marubozu is bullish and appears early in a new trend, I open my trade on the next candle and set my stop-loss just below the most recent swing low. For a bearish pattern, I do the opposite – stop-loss just above the last swing high.

An important point: the Marubozu is usually a continuation pattern unless it appears at the end of a exhausted trend. In that case, it could actually signal a reversal. That’s why the context is everything.

There is also the engulfing pattern, which is sometimes confused with it. The difference is clear: Marubozu is a single-candle formation, engulfing requires two candles. Also, engulfing is more of a reversal pattern, while the Marubozu pattern tends to signal continuation.

At the end of the day, the Marubozu pattern works well for assessing market sentiment, especially when it appears early in a new trend. The pressure is there, the price is moving. But be cautious at the end of mature trends – that’s where the Marubozu could signal a reversal. As always: use fundamental analysis together with other technical indicators. Look at the overall perspective, not just a single candle.