Marubozu

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Candle marubozu white.svg
Candle marubozu black.svg
White v. black marubozu

Marubozu is the name of a Japanese candlesticks formation used in technical analysis to indicate a stock has traded strongly in one direction throughout the session and closed at its high or low price of the day. A marubozu candle is represented only by a body; it has no wicks or shadows extending from the top or bottom of the candle. A white marubozu candle has a long white body and is formed when the open equals the low and the close equals the high. [1]

Technical analysis security analysis methodology

In finance, technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the same tools of technical analysis, which, being an aspect of active management, stands in contradiction to much of modern portfolio theory. The efficacy of both technical and fundamental analysis is disputed by the efficient-market hypothesis which states that stock market prices are essentially unpredictable.

Stock financial instrument

The stock of a corporation is all of the shares into which ownership of the corporation is divided. In American English, the shares are commonly known as "stocks." A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. This typically entitles the stockholder to that fraction of the company's earnings, proceeds from liquidation of assets, or voting power, often dividing these up in proportion to the amount of money each stockholder has invested. Not all stock is necessarily equal, as certain classes of stock may be issued for example without voting rights, with enhanced voting rights, or with a certain priority to receive profits or liquidation proceeds before or after other classes of shareholders.

The white marubozu candle indicates that buyers controlled the price of the stock from the opening bell to the close of the day, and is considered very bullish.

Market sentiment General attitude of investors to market price development

Market sentiment is the general prevailing attitude of investors as to anticipated price development in a market. This attitude is the accumulation of a variety of fundamental and technical factors, including price history, economic reports, seasonal factors, and national and world events.

A black marubozu candle has a long black body and is formed when the open equals the high and the close equals the low. A black marubozu indicates that sellers controlled the price from the opening bell to the close of the day, and is considered very bearish.

See also

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Open-high-low-close chart a type of chart typically used to illustrate movements in the price of a financial instrument over time.

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The doji is a commonly found pattern in a candlestick chart of financially traded assets in technical analysis. It is characterized by being small in length—meaning a small trading range—with an opening and closing price that are virtually equal.

Spinning top is a Japanese candlesticks pattern with a short body found in the middle of two long wicks. A spinning top is indicative of a situation where neither the buyers nor the sellers have won for that time period, as the market has closed relatively unchanged from where it opened; the market is indecisive regarding its trend. The upper and lower long wicks, however, tell us that both the buyers and the sellers had the upper hand at some point during the time period the candle represents. When a spinning top forms after a run up or run down in the market, it can be an indication of a pending reversal, as the indecision in the market is representative of the buyers losing momentum when this occurs after an uptrend and the sellers losing momentum after a downtrend.

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References

  1. "Candlestick Charting - the Marubozu indicator (FT Press)". www.ftpress.com. Retrieved 2015-12-11.