Bulkowski’s Closing Black Marubozu

Written and copyright © 2008-2009 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 difference in appearance between a black marubozu and a closing black marubozu is an upper shadow. The closing black marubozu has one, but the black marubozu does not. Performance is similar for both. They act as continuations of the prevailing price trend, occur often in a historical price series, but overall performance over 10 days is poor (mid list).

Important Results

Theoretical performance: Continuation. Tested performance: Continuation 52% of the time Frequency rank: 18 Overall performance rank: 43 Best percentage meeting price target: 76% (bull market, up breakout) Best average move in 10 days: 5.82% (bear market, up breakout) Best 10-day performance rank: 20 (bear 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.

Closing Black Marubozu

Discussion

The closing black marubozu is a tall black candlestick with an upper shadow but no lower one. It acts as a continuation of the existing price trend 52% of the time, which is just about random. The performance after the breakout is mid list at 43, where 1 is best and 103 worst. The best average move in 10 days is 5.82% and that occurs after an upward breakout in a bear market. Both are counter trend, meaning a bear market sees lower prices over time and the closing black marubozu has a close at the bottom of the candle. Price has to fight its way upward, against the one-day down trend and the bear market to breakout higher. I consider wonderful moves of 6% or more, so the closing black marubozu comes close. That performance also gives the candle its best rank of 20.

Identification Guidelines

Three Trading Tidbits

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.

1. Closing black marubozu candles that appear within a third of the yearly low perform best -- page 515.
2. Closing black marubozu candles with tall upper shadows outperform -- page 516.
3. Closing black marubozu within a third of the yearly low often act as continuation candlesticks -- page 516-517.

Example

The daily chart shows two closing black marubozu candles, the first at A and the second at B. Both are tall black candles with no lower shadows, but they do have upper shadows. In this example, the candlesticks appear in a downward price trend, and both breakout downward, too.

If the candle before B were white, the AB pattern would represent a variation of the falling three methods candlestick. Besides the black candle, the only other glitch I see is that the second candle drops below the high-low range of the first candle (A). Having so many identification rules for the falling three methods candlestick pattern is what makes it so rare.

-- Thomas Bulkowski