What is Black opening Marubozu?
Black Opening Marubozu is a type of candlestick where the open price is the highest price of that underlying stock for that session,however close price is not the lowest price.
Underlying Psychology of Black Opening Marubozu
There were many market participants ready to sell the underlying stock at any price during the session and due to this high supply the price kept on decreasing, however towards the end of session buyers emerged and seller couldn’t close it at day’s lowest.
If you think about it,the Black Opening Marubozu feels weaker compared to Bearish Marubozu or Black Closing Marubozu as even though sellers were in control during the session, they couldn’t defeat the buyers completely and hence couldn’t close at session’s low.
Example of How to Use Black Opening marubozu
How to Trade Black Opening Marubozu
Decision: In case of Black Opening Marubozu,traders start looking for selling opportunities only after confirmation, sell price should be around the closing price of confirmation candle.
Stop loss: What if the market reverse its direction after printing the black opening Marubozu ? The high of the candle will act as stop-loss in case that happen
Main Points to Consider
- Don’t trade extremely large Marubozu candles,as the stop loss becomes too wide to handle.
- Trading Marubozu with high volume only leads to better performance overtime.
- Avoid trading Opening Marubozu candles alone as they are not strong candles compared to other types of Marubozu candles.