Marubozo

A Marubozo is a type of candlestick charting formation that indicates a security's price did not trade beyond the range of the opening and closing price.

The name Marubozo comes from the Japanese word for a candle with no shadow. The defining characteristic of the Marubozo on a chart is the absence of upper or lower shadows, meaning the chart does not extend beyond the opening day price range. On an up day the opening price is equal to the day's low, and the closing price is equal to the day's high.

On days that the stock has gained it is indicative of a bull market and on days that it has lost it is indicative of a bear market.

Gaining days, or up days, strongly indicate that there is a greater demand of the stock than there is a supply. Or at least a greater demand for the stock than there is a willingness to sell it.  The opposite can be said on losing day, or down days.

Candlestick charting has been popular since the days of Japanese rice merchants and rice traders. They referred to the wide part of the candlestick as the real body, and they would use it to determine whether the closing price had risen above or fallen below the opening price.

Charting activity on the stock market isn’t a new idea. Analysts have been charting since before the New York Stock Exchange (NYSE) was created, albeit in a more rudimentary form than is used today. Charts are used to create an easy to follow visual representation of activity on the stock market. Without taking into consideration the reasons behind declines or growth, charts track the changes and show activity over time.

Even a casual investor can read charts once they understand the basics of what they are tracking. This will give an investor the information they potentially need to make decisions based on what is happening throughout the market. By using charts, they can see what is being excessively purchased or sold and decide whether they would like to follow those trends or try and take advantage of assets that are less popular or unload assets that are in high demand.

Just be aware, charts can track many different features, so pay close attention to what information you’re seeing broken down. Some charts cover daily activity, while others may track in weeks or months. For a larger, more comprehensive picture, an investor may want to review many different charts to see changes over both short-term and long-term periods before making decisions.