Definition - Again, this is a pattern with just one candlestick and sees a black Marubozu during an uptrend. After opening at the highest point of the day, prices soon drop and close near the low. As a result, a small shadow is left behind towards the bottom of the candle. If the candlestick has a longer body, there will be a much stronger resistance.
- To start, the market opens high and gaps up in a market that is experiencing a prevailing uptrend. At close, prices will be towards the low of the day.
- Therefore, formed is a Black Opening Marubozu with no upper shadow and a long black body.
Patterns and Flexibility
As mentioned previously, either a Black Marubozu or a Black Opening Marubozu will appear and, compared to the two previous white candlesticks, it should open higher.
Behaviour of Traders
At first, it seems as though the uptrend will continue and is in a comfortable position because of the high open and upward gap. However, the market changes quickly and prices fall throughout the day. For the bulls, this creates a concern and many will sell their positions; in turn, this has the potential to reverse the trend direction.
Sell/Stop Loss Levels
For there to be confirmation, the price must cross below the last close which is seen as the confirmation level. In terms of stop loss, this will be the last high. If the prices rise after the bearish signals, the stop loss will be triggered if there are two consecutive days of highs above the stop loss level whilst no bearish pattern has been detected.