I want to share a quite powerful candlestick pattern on the chart — bearish marubozu. This is one of the signals I often pay attention to during technical analysis.

So, a bearish marubozu is basically a red candle with a full body, without shadows or wicks on the top or bottom. It means the open is the same as the highest level, and the close is the same as the lowest level. When you see this pattern, it indicates that sellers have dominated from open to close — the bearish momentum is very clear.

Now, when I encounter a bearish marubozu, I interpret it in a few ways:

First, if the market is trending up and suddenly a bearish marubozu appears, it could be a warning that buyers are starting to weaken. This is a potential reversal signal — sellers are beginning to take control. I usually watch out for this at resistance levels.

Second, if the market is already trending down, a bearish marubozu confirms that selling pressure remains very strong. This isn’t a reversal signal but a continuation signal — the price is likely to keep falling.

But don’t act immediately just by looking at one candle. I always wait for confirmation from the next candle. If the following candle also closes lower or opens below the close of the marubozu, then I’m confident to enter.

Regarding entry points: if I want to short, I enter when the next candle opens lower, or wait for the price to break below the close of the bearish marubozu. Alternatively, I can also enter when the price tests the nearest support.

For stop-loss, I always place it just above the open of the marubozu candle — this is the most logical level. If the price breaks out above this, it means the setup has failed.

Profit targets? I look at the next major support zone. You can also use Fibonacci levels or previous swing lows as references. To maximize profit, trailing stop-loss can be an option — let the trade run as long as the momentum persists.

The important thing to remember is, while bearish marubozu is powerful, it’s not a 100% guarantee. Always combine it with broader market context and strict risk management. Good luck!