Marubozu and belt hold lines. I'm pretty sure you were expecting two different patterns.
Sorry to disappoint you,
they are the same pattern.
Traders call the single candle marubozu,
but when the candle appears at the end of the trend, they call the reversal pattern belt-hold line.
Since we don't really mind about the name of the pattern, we will only call this candle Marubozu,
we will not use the other term belt-hold lines.
What is a marubozu?
A marubozu is a candle with a long real body and no shadows.
If the body of the candle is green, we have a bullish marubozu;
if the real body is red we have a bearish marubozu. Even for this pattern,
I invite you to catch the logic behind it, so there's no need to be super rigid about the rules.
If you see a very small upper shadow or a very small lower shadow, you can still consider the candle
as a marubozu.
Let's consider a bullish marubozu for example. From the very beginning to the end of the session,
buyers push the price higher.
So this candle is the most powerful sign of buyers on the market.
I want to give you an example of daily life experience because I like to show how Forex behavior is
usually similar to other situations of normal life.
Last Christmas I wanted to buy a board game so I went on Amazon and I looked for Speakout.
You probably know the game because it's become ridiculously popular last year.
Anyway the game was so popular that no seller in UK had the game anymore and it was still November,
more than one month before Christmas.
Some days Amazon was receiving some stock like 200 pieces but it was almost impossible to buy the game
if you were not at the computer 24 hours per day, because those two hundred pieces were gone in 15 minutes.
Everyone wanted to make sure to have the game for Christmas. In Forex terms we could say that buyers
were increasing the demand.
You can see here that the original price for the game is 21.99 pounds in UK. By
the end of November,
Amazon was selling the game for £50 and the price was increasing every time Amazon received new stock.
Now consider those 15 minutes that you could use to buy the game on Amazon as a forex candlestick.
The action of the buyers regarding that game can be compared to a Marubozu. Buyers start to buy
from the first seconds that the board game is available on Amazon and they only stop when the game is
sold out. In Forex market,
we see that buyers start to buy the couple from the beginning of the session to the end.
Now the question is: if the buyers have been so active during the session and were still active
by the end of the session, is it likely that they want to buy some more when the next session opens?
Yes! That's why traders expect to see another bullish candle after a bullish marubozu.
So far, we have only seen reversal signals,
marubozu can be used as a reversal pattern and as a continuation one as well. If it appears going
against the trend, like the one highlighted in yellow in this chart,
it forms a reversal signal. Most of times this signal will be a bullish or bearish engulfing, a double
candlestick pattern that we will study later on.
If the marubozu appears confirming the trend, like the two candles in this chart, it will form
a continuation pattern.