Bearish Closing Marubozu Explained & Backtested (2024)

The bearish closing marubozu, also known as the black closing marubozu, is a frequently occurring one-bar Japanese candlestick pattern that’s thought to be bearish.

But what if I told you this pattern is not a bearish signal as traditionally traded, and you can make money using this single-bar pattern going in the other direction using data-driven trading strategies? 

Would you be interested?

If so, keep reading if you want to learn how to trade the bearish closing marubozu most profitably on your candlestick charts.

What Are Bearish Closing Marubozu Candlestick Patterns?

Bearish Closing Marubozu Candlestick Pattern Illustration © Analyzing Alpha
Bearish Closing Marubozu Candlestick Pattern Illustration

The bearish closing marubozu is supposedly a candlestick pattern that alerts traders that the bears are here to stay. We’ll find out if this is true in a few minutes, but before we do, let’s learn how to identify this single candlestick pattern.

How to Identify the Bearish Closing Marubozu Candlestick Pattern

Bearish Closing Marubozu Candlestick Pattern on the Apple (AAPL) December 13th, 2021 daily chart
Bearish Closing Marubozu Candlestick Pattern on the Apple (AAPL) December 13th, 2021 daily chart

The following are the requirements for a valid bearish closing marubozu:

  • A long black body.
  • A close price very close to the low. (A tiny lower shadow)
  • The bearish closing marubozu doesn’t require a trend.

We see the bearish closing marubozu on the Apple (AAPL) daily chart on December 13th, 2021. The current trend doesn’t matter, so we must identify a long black candle with a tiny or no lower wick.

This single candlestick pattern occurs frequently and is easy to identify. But how do we trade this pattern, and can we find a trading strategy that pays dividends?

How to Trade the Bearish Closing Marubozu Candlestick Pattern

The data shows that the bearish closing marubozu is best traded bullish in all markets.

In other words, if you’ve been trading the bearish closing marubozu using a traditional trading strategy, you’ve likely lost money.

But don’t worry, this single bar pattern becomes quite profitable when trading using history as our guide. But before we learn how to do that, let’s understand how most traders trade this pattern.

Bearish Closing Marubozu Bearish Trade Setup

Bearish Closing Marubozu Bearish Reversal Trade Setup on the Alphabet (GOOG) November 22nd, 2021 daily chart
Bearish Closing Marubozu Bearish Reversal Trade Setup on the Alphabet (GOOG) November 22nd, 2021 daily chart

Again, the black closing marubozu is one of the most straightforward patterns to identify. We see one long bearish bar with little to no lower wick on Google’s (GOOG) daily chart on November 22nd, 2021.

Traders traditionally go short at a break of the bar’s low and set a stop loss above the candle high. We see that price does continue moving in the bearish direction leading to a profitable trade.

But as I mentioned, if you traded this pattern to the downside, you’re going against what history tells us works – you’re not acting like a data-driven trader.

So how would data-driven traders make money off of this pattern?

Bearish Closing Marubozu Bullish Trade Setup

Bearish Closing Marubozu Bullish Continuation Trade Setup on the Microsoft (MSFT) September 10th, 2021 daily chart
Bearish Closing Marubozu Bullish Continuation Trade Setup on the Microsoft (MSFT) September 10th, 2021 daily chart

We can see the bearish closing marubozu on the Microsoft (MSFT) daily chart on September 10th, 2021. 

A data-driven trader will enter at the break of the close, setting a stop loss below the low of the closing marubozu signal. 

In the above example, we would enter the next day at $295.71 with a stop loss below $295.83, leading to a profitable trade.

The entry rules are the same whether the price is in an uptrend or downtrend, but it performs better when it is in a downtrend.

Does the Bearish Closing Marubozu Candlestick Pattern Work? (Backtest Results)

I backtested the bearish closing marubozu candlestick patterns on the daily timeframe in the crypto, forex, and stock markets using the following rules:

  • A close above the 50-day SMA constitutes an uptrend.
  • I tested risk-reward ranges from 1 to 5. 
  • The optimal risk-reward ratio is selected using profit per bar.
  • Entry and exits are discussed in the how-to trade section above.
  • Confirmation must occur within three days of the pattern signal.

Similar Candlestick Patterns

Multiple candlestick patterns are often confused with the bearish closing marubozu. It’s essential to understand the differences when using candlestick pattern technical analysis.

Bullish Closing Marubozu vs. Bearish Closing Marubozu

Bullish Closing Marubozu Candlestick Pattern © Analyzing Alpha
Bullish Closing Marubozu Candlestick Pattern

The bullish closing marubozu candlestick pattern is almost precisely the same as its bearish cousin. The bullish version has a large bullish candle with little to no upper wick, while the bearish closing has a sizeable bearish candle with little to no lower wick.

Bearish Marubozu vs. Bearish Closing Marubozu

Bearish Marubozu Candlestick Pattern Illustration © Analyzing Alpha
Bearish Marubozu Candlestick Pattern Illustration

The bearish marubozu candlestick pattern is very similar to the bearish closing marubozu. Both have large bearish or black bodies, but the bearish marubozu requires little to no upper and lower wicks, while the bearish closing marubozu only requires little to no lower wick.

The Bottom Line

The bottom line is the bearish or black closing marubozu pattern is easy to identify and occurs frequently. Common trading knowledge recommends trading this pattern to the downside, a money-losing proposition based on history.

Instead, this pattern should be traded as a bullish continuation or bullish reversal, with this candle acting as a potential pivot point.

If you’re interested in data-driven trading, you check out my article, where I backtested and ranked every candlestick pattern.

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