Bulkowski’s Closing White Marubozu

Written and copyright © 2008-2010 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 closing white marubozu candlestick shares a lot with watching grass grow: neither is very exciting. The candlestick acts as a continuation pattern 55% of the time, but that is what I call near random. Overall performance, rank 70, places the candlestick well behind the pack. Is there anything redeeming about the closing white marubozu? Let’s take a closer look.

Important Results

Theoretical performance: Continuation Tested performance: Continuation 55% of the time Frequency rank: 15 Overall performance rank: 70 Best percentage meeting price target: 73% (bear market, down breakout) Best average move in 10 days: -5.36% (bear market, down breakout) Best 10-day performance rank: 27 (bear market, down 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 White Marubozu

Discussion

The closing white marubozu candlestick is a tall white candle with no upper shadow, but it does have a leg to stand on (a lower shadow). It acts as a continuation of the prevailing price trend. With a frequency rank of 15, it is as common as ants at a picnic. Unfortunately the overall performance rank is a lousy 70. After the breakout, price does not trend far, which is why the rank is so poor (1 is best out of 103 candlestick types).

The best average move 10 days after the breakout is a respectable drop of 5.36%, and that occurs after a downward breakout in a bear market, placing the performance rank at 27, too.

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 white marubozu candles that appear within a third of the yearly low perform best -- page 523.
2. Closing white marubozu candles taller than the median show price that moves about 50% farther after the breakout than those shorter than the median -- page 523.
3. Closing white marubozu within a third of the yearly high tend to act as continuations most often -- page 525.

Example

The closing white marubozu candle appears in the daily chart at A. It is a tall white candlestick with a lower shadow and price closes at the high for the day, meaning it has no upper shadow. This one appears in an upward price trend, but the trend could just as easily have been downward. The breakout is upward when price closes above the top of the closing white marubozu candle the next day.

You might think that the closing white marubozu begins a three white soldiers candlestick pattern, but this example has two flaws. First, the price trend is upward instead of downward and second, price should open within the body of the prior candle. It does not during the second day of the three candle line pattern. In other words, the bodies should overlap more than they do.

Other Examples

• Closing white marubozu in NFG.

-- Thomas Bulkowski