The Bullish Marubozu Candlestick Pattern is used by Manual Traders, but does it actually deliver profits?

Bullish Marubozu is a popular Candlestick Pattern and it is taught by educators and featured on websites providing knowledge to those with the patience to learn.  This is a part of a series of articles that cover popular Technical Analysis methods and are backtested to see how they handle different scenarios.  Often, Technical Analysis strategies would entail more than just one criteria, but in this case each Bullish Marubozu Candlestick Pattern is being isolated and tested alone based on how it is supposed to be used and even some experimental ways of using them.

How the Bullish Marubozu Candlestick Pattern will be tested.

About the Modeling Quality

In MetaTrader 4, there is the Strategy Tester and it backtests trades that have taken place in the past.  Is it the most accurate method of backtesting?  No, unless you are using “real ticks”, which may still fall out of alignment with the particular broker and it becomes a complete mess.  So the modeling quality rates with what is considered a ‘tick’ in MT4 is going to be 90%, which should provide a good enough simulation as long as the backtested strategy is not scalping or too sensitive to news events where fluctuations within a minute can create whipsaws.  It is generally a good enough modeling quality rate for just about anything else.

Multiple Results with Different Time Frames, Trading Styles and Instruments

The following Time Frames will be used:

• 5 Minute
• 1 Hour
• 4 Hour
• 1 Day

Styles featured will include:

• 140 pip Take Profit and Stop Loss of 100 pips
• 140 pip Take Profit with a 20 pip Stop Loss
• 140 pip Take Profit with a 60 pip Stop Loss and a 40 pip Trailing Stop
• 140 pip Take Profit with a 60 pip Stop Loss
• 80 pip Take Profit and Stop Loss of 100 pips
• 80 pip Take Profit with a 20 pip Stop Loss
• 80 pip Take Profit with a 40 pip Stop Loss and a 30 pip Trailing Stop
• 80 pip Take Profit with a 60 pip Stop Loss
• 20 pip Take Profit and Stop Loss of 100 pips
• 20 pip Take Profit with a 20 pip Stop Loss
• 20 pip Take Profit with a 20 pip Stop Loss and a 10 pip Trailing Stop
• 20 pip Take Profit with a 60 pip Stop Loss

It will be used as an all-encompassing pattern for testing purposes, it is not considered a continuation or reversal pattern by trend.

Instruments Used will Include:

• EURUSD
• USDJPY
• AUDUSD
• EURGBP

What range of time will be the Bullish Marubozu Candlestick be tested?

The Bullish Marubozu Candlestick Pattern will be tested during the period of June 1, 2015 to May 31, 2018.  Is it necessarily an adequate time frame to test?  Possibly not, but there are a wide array of market environments.

What is The Bullish Marubozu Candlestick Pattern? 

The Bullish Marubozu Candlestick is simply depending upon your screen setup a Tall Green or White Candle with no shadows.  It’s a candlestick with no wicks, it’s a basically a tall block.

It’s commonly viewed as a bullish candlestick that will bring about an upswing for a currency pair, the question is, “Will the Bullish Marubozu Candlestick Pattern hold up such a reputation?”

The second question is “What is a tall candlestick?”  For the purposes of this testing procedure, a tall candlestick will be double the size of the highest high subtracted from the lowest low among candlesticks in the previous ten candlesticks.

EURUSD – 5 Minute Chart

140 pip Take Profit and Stop Loss of 100 pips

140 pip Take Profit with a 20 pip Stop Loss

140 pip Take Profit with a 60 pip Stop Loss

140 pip Take Profit with a 60 pip Stop Loss and a 40 pip Trailing Stop

80 pip Take Profit and Stop Loss of 100 pips

80 pip Take Profit with a 20 pip Stop Loss

80 pip Take Profit with a 60 pip Stop Loss

80 pip Take Profit with a 40 pip Stop Loss and a 30 pip Trailing Stop

20 pip Take Profit and Stop Loss of 100 pips

20 pip Take Profit and Stop Loss of 20 pips

20 pip Take Profit and Stop Loss of 60 pips

20 pip Take Profit and Stop Loss of 20 pips with Trailing Stop of 10 pips

EURUSD – 1 Hour Chart, 4 Hour Chart, Daily Chart

No Bullish Marubozu Candlestick Patterns were triggered on any of these charts.

USDJPY – 5 Minute Chart

140 pip Take Profit and Stop Loss of 100 pips

It is a similar story to EURUSD.  USDJPY only triggered three Bullish Marubozu Candlestick Patterns, which means that is a rare occurrence.  It’s important to show that there were three trades placed.  With EURUSD, it was also interesting to see how the results deviate based on the conditions, but no sense repeating it with USDJPY considering how this currency pair suffers from the same low sample figure as EURUSD.

USDJPY – 1 Hour Chart, 4 Hour Chart, Daily Chart

No Bullish Marubozu Candlestick Patterns were triggered on any of these charts.

AUDUSD – 5 Minute Chart

140 pip Take Profit and Stop Loss of 100 pips

Once again, too small of a sample size to really glean any true conclusions.  As illustrated in EURUSD, all the different scenarios would just massage how four trades took place over the course of three years.

AUDUSD – 1 Hour Chart, 4 Hour Chart, Daily Chart

No Bullish Marubozu Candlestick Patterns were triggered on any of these charts.

EURGBP – 5 Minute Chart

It’s another case of an extremely small sample that really is difficult to interpret.

EURGBP – 1 Hour Chart, 4 Hour Chart, Daily Chart

No Bullish Marubozu Candlestick Patterns were triggered on any of these charts.

What Conclusions Can Be Drawn?

The infrequency of the Bullish Marubozu Candlestick Pattern makes it very difficult to make any conclusions other than it being a candlestick that cannot be counted upon.  There are better chart patterns and candlesticks to find.

The post Testing the Effectiveness of the Bullish Marubozu Candlestick Pattern appeared first on Freevestor.