Candlestick Basic

Long Days

The long day represents a large price move from open to close. Long represents the length of the candle body. What qualifies a candle body to be considered long? That is a question that has to be answered relative to the chart being analyzed. The recent price action of a stock determines
whether a long candle has been formed. Analysis of the previous two or three weeks of trading should be a current representative sample of the price action.

Short Days

Short days can be interpreted by the same analytical process as used with the long candles. There is a large percentage of trading days that do not fall into either of these two categories.

Marubozu

In Japanese, Marubozu means close-cropped or close-cut. Bald or Shaven Head is more commonly used in Candlestick analysis. Its meaning reflects the fact that there are no shadows extending from either end of the body.

Black Marubozu

The long black body with no shadows at either end is known as a Black Marubozu. It is considered a weak indicator. It is often identified in a bearish continuation or bullish reversal pattern, especially if it occurs during a downtrend. A long black candle could represent the final
sell off, making it an alert to a bullish reversal setting up. The Japanese often call it the Major Yin or Marubozu of Yin.

White Marubozu

The White Marubozu is a long white body with no shadowson either end. This is an extremely strong pattern. Consider how it is formed. It opens on the low and immediately heads up. It continues upward until it closes, on its high. Counter to the Black Marubozu, it is often the
first part of a bullish continuation pattern or bearish reversal pattern. It is called a Major Yang or Marubozu of Yang.

Closing Marubozu

The Closing Marubozu has no shadow at its closing end. A white body does not have a shadow at the top. A black body does not have a shadow at the bottom. In both cases, these are strong signals corresponding to the direction that they each represent.

Opening Marubozu

The Opening Marubozu has no shadows extending from the open price end of the body. A white body would not have a shadow at the bottom end; the black candle would not have a shadow at its top end. Though these are strong signals, there are not as strong as the Closing Marubozu.

Spinning Top

Spinning Tops are depicted with small bodies relative to the shadows. This demonstrates some indecision on the part of the bulls and the bears. They are considered neutral when trading in a sideways market. However, in a trending or oscillating market, a relatively good rule of
thumb is that the next day’s trading will probably move in the direction of the opening price. The size of the shadow is not as important as the size of the body for forming a Spinning Top.

Doji

The Doji is one of the most important signals in Candlestick analysis. It is formed when the open and the close are the same or nearly the same. The lengths of the shadows can vary. The longer the shadows are, the more significance the Doji becomes. ALWAYS pay attention to the Doji.