Basic Japanese Candlestick Patterns

What do marubozus, spinning tops, and dojis have in common？

They're all Japanese candlesticks in their most basic form!

Let's look at each of the many types of candlesticks and what they signify in terms of price activity.

Spinning Tops

Japanese candlesticks with a long upper shadow, a long lower shadow, and little real bodies are known as spinning tops. The colour of the real body is unimportant.

The Spinning Top pattern represents the buyers' and sellers' hesitation.

The small actual body (whether hollow or full) moves very little from open to close, and the shadows suggest that both buyers and sellers were battling, but no one could win.

Despite the fact that the session started and ended with no change, prices surged up and down considerably in the meantime.

There was a standstill since neither buyers nor sellers could take the upper hand.

• When a spinning top emerges during an upswing, it typically indicates that there aren't many buyers remaining and that the trend may be reversing.

• When a spinning top occurs during a downturn, it typically indicates that there aren't many sellers remaining and that the trend may be changing.

Marubozu

Sounds like voodoo magic, doesn't it？ “I shall cast the Marubozu's wicked curse on you!”

Thankfully, this is not the case. The absence of shadows cast by the body is referred to as marubozu.

“Marubozu” is a Japanese word that means “bald head” or “shaved head.”

As a result, a Marubozu candlestick is a bald or shaved candle that lacks a shadow or wick.

Depending on whether the candlestick's body is full or hollow, the high and low are the same as the open and close.

In the image below, you can see two different varieties of Marubozus.

A White Marubozu has a long, white body with no shadows. The open price is the same as the low price, and the close price is the same as the high price.

This means the candle started at the lowest price and ended at the highest price.

This is a very strong candle since it suggests that the session was dominated by buyers. A bullish continuation or reversal pattern's initial component is typically this indicator.

A Black Marubozu's body is long and dark, with no shadows. The high is the same as the open, and the low is the same as the close.

This means the candle started at its highest point and terminated at its lowest.

This is a bearish candle because it shows that the market movement throughout the session was dominated by sellers. It is frequently used to indicate a bearish continuation or reversal.

Here are some parameters based on where a marubozu is located and what colour it is:

White Marubozu

• A continuation is expected if a White Marubozu occurs near the end of an upswing.

• A reversal is expected if a White Marubozu occurs near the conclusion of a downtrend.

Black Marubozu

• A continuation is expected if a Black Marubozu occurs towards the conclusion of a downturn.

• A reversal is expected if a Black Marubozu appears near the conclusion of an upswing.

Doji

Doji candlesticks have the identical open and close prices, or have extremely short bodies at the very least. The body of a Doji should be very small and appear as a thin line.

Doji candles indicate hesitation or a battle between buyers and sellers over territory placement.

During the session, prices fluctuate above and below the open price, but they close at or very close to the open price.

Neither the buyers nor the sellers were able to win control, resulting in a tie.

Doji candlesticks come in FOUR different varieties.

The lengths of the upper and lower shadows may differ, giving the forex candlestick the appearance of a cross, inverted cross, or plus sign.

The term “Doji” is interchangeable in both single and plural forms.

When a Doji appears on your chart, pay close attention to the candlesticks that precede it.

The formation of a Doji following a succession of candlesticks with extended hollow bodies (such as White Marubozus) indicates that the buyers are growing weary and weakened.

More purchasers are needed for the price to continue to rise, but there aren't any! Sellers are salivating at the prospect of stepping in and lowering the price.

The formation of a Doji following a succession of candlesticks with extended full bodies (such as Black Marubozus) indicates that sellers are growing weary and weakened.

In order for the price to continue to fall, more vendors are needed, but they are all sold out! The idea of a low-cost entrance has buyers salivating.

While the slide is stalling owing to a lack of new sellers, any turnaround will require more purchasing strength.

Look for a white candlestick that will fit over the long black candlestick's open flame.

In the classes that follow, we'll look at some distinct Japanese candlestick patterns and what they mean.

By the end of this Japanese candlesticks course, you should be able to recognise various candlestick patterns and make effective trading decisions based on them.