Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30 years of stock market experience and widely regarded as a leading expert on chart patterns. His four books, including the best selling Encyclopedia of Chart Patterns, have been translated into seven languages. He may be reached at

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Bulkowski's Opening White Marubozu

Market

Industrials (^DJI):

Transports (^DJT):

Utilities (^DJU):

Nasdaq (^IXIC):

S&P 500 (^GSPC):

As of 02/07/2012

12,878 33.07 0.3%

5,323 -10.92 -0.2%

452 2.11 0.5%

2,904 2.09 0.1%

1,347 2.72 0.2%

YTD

5.4%

6.0%

-2.7%

11.5%

7.1%

Tom's Targets Overview: 02/03/2012

13,100 or 12,400 by 02/15/2012

5,500 or 5,150 by 02/15/2012

470 or 440 by 02/15/2012

3,100 or 2,800 by 02/15/2012

1,375 or 1,300 by 02/15/2012

Test Portfolios and CPI

Indus. strength: 2.4%

Mutt Losers: None YTD

Mutt Winners: 2.5%

Wilder RSI: None YTD

CPI:

on 12/20/2011

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 opening white marubozu performs much like other marubozu candles: Lousy. This one acts as a continuation 54% of the time, ranking 34, but it has a frequency rank of 7. That means you will find it not only on every street corner, but growing out of every crack in the sidewalk along the way. Overall performance is a distant 75th out of 103 candles where 1 is best. The candle may look pretty, but its investment implications are marginal at best.

Important Results

Discussion

Identification Guidelines

Three Trading Tidbits

Example

Other Examples

Opening White Marubozu Important Results

Theoretical performance: Continuation

Tested performance: Continuation 54% of the time

Frequency rank: 7

Overall performance rank: 75

Best percentage meeting price target: 71% (bear market, down breakout)

Best average move in 10 days: -4.37% (bear market, down breakout)

Best 10-day performance rank: 37 (bull 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.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Opening White Marubozu

Opening White Marubozu Discussion

As I mentioned in the introduction, the opening white marubozu candlestick is not a star performer. In fact, it acts almost randomly -- 54% of the time price continues the prevailing trend after the breakout. Ten days after the downward breakout in a bear market, price declined an average of 4.37% over that span. That is the best showing among the four categories of bull/bear market and up/down breakouts that I looked at. A good showing would be a drop of at least 6%, so the opening white marubozu falls well short. The performance rank over 10 days agrees with my assessment. The candle ranks 37th. That is the same position that I had in my graduating high school class, but I had more than 103 classmates to compete against.

Opening White Marubozu Identification Guidelines

Characteristic	Discussion
Number of candle lines	One
Price trend leading to the pattern	None required.
Configuration	Look for a tall white candle with an upper shadow but no lower one.

Three Trading Tidbits for the Opening White Marubozu

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.

Opening white marubozu candles that appear within a third of the yearly low perform best -- page 539.
Opening white marubozu within a third of the yearly high frequently act as continuations -- page 541.
Volume gives performance clues -- page 540.

Opening White Marubozu Example

The opening white marubozu candlestick on the daily scale

The daily chart shows two opening white marubozu candlesticks at A and B. Each is a tall white candle with no lower shadow but one that pokes out the top. Height is relative. Compare the height with other recent candles to gauge whether or not the candle is "tall."

Both of these opening white marubozu candles appear in an upward price trend. The breakout, which is a close above the top of the candle (upward breakout) or below the bottom of the candle (downward breakout) is upward in both cases. A study I conducted and discussed in my Encyclopedia of Candlestick Charts book is that a minor high or low occurs within a day (plus or minus) of a tall candle between 67% (minor high) and 72% (minor low) of the time. You can see that at B. Price peaks a day later and then reverses. Traditional candle theory says that after an opening white marubozu, you can expect a nice long price run. My statistical research suggests otherwise.

-- Thomas Bulkowski

Other Opening White Marubozu Examples

Opening white marubozu in NFG.