Marubozo

In 1973, Elton John sang about a candle in the wind. And then again when Lady Di died. But today, we’re going to talk about a candle with no shadow, otherwise known as a marubozo.

On a candlestick chart, a marubozo looks like a long black or white bar (the candle) with no line (or shadow) protruding from its top or bottom. When we see one, it means that a stock either opened at its low price and closed at its high price (white marubozo) or opened at its high price and closed at its low price (black marubozo).

“But what does it all mean?” one might ask. For them, we have an answer. In the case of a white marubozo, it means the stock is trending upward and people are feeling very bullish about it. In the case of a black marubozo, the opposite is true.

While one day might not a reliable trend make, marubozos can help us identify patterns…and hopefully make some investment decisions that capitalize on them.