10 Nov 2015


Marubozu candlestick signal is a great tool when trading range breakouts, because it clearly shows whether the market sentiment is bullish or bearish.

1) Price breakout from a box range with a bearish marubozu

In the chart you can see the price breaks out from a box range consolidation after a retracement higher in a downtrend. As the closing price for the bearish marubozu is the same as the session's low it adds to the probability that this indeed is a legitimate breakout.

In situations like this I usually enter with a smaller sell position (click here to check out an article about my risk management) and wait for the price to test the former support as the new resistance to scale in a full position. (click here to learn more about the 3 principles of support and resistance).

2) The price retraces higher for a polarity change

As expected the price retraces higher to test the former range support as the new resistance. The price has also formed a bearish wedge and you should enter on a dowside break to scale in a full position.

The price targets are the 61.8% and 100% breakout targets for the box range and a stop should be placed just above the resistance.

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