The Marubozu & Bollinger Bands Strategy is a dynamic trading method that blends strong momentum candlestick signals with volatility-based indicators to identify breakout entries and continuation trades. A Marubozu candle shows clear dominance by buyers or sellers, while Bollinger Bands highlight price expansion or contraction zones—making this strategy effective in trending or breakout environments.

This approach is especially useful in forex, indices, and commodities, particularly on H1, H4, or daily timeframes.

What Is a Marubozu Candle?

A Marubozu is a full-bodied candle with no wicks or very small shadows, showing strong buying or selling pressure.

Types:

• Bullish Marubozu: Opens at the low, closes at the high → strong upward momentum
• Bearish Marubozu: Opens at the high, closes at the low → strong downward momentum

Implication: Market is controlled entirely by one side; high probability of follow-through in the same direction.

What Are Bollinger Bands?

Bollinger Bands consist of:

• A 20-period moving average (middle band)
• An upper band (MA + 2 standard deviations)
• A lower band (MA − 2 standard deviations)

Key uses:

• Identify volatility
• Spot breakouts or mean-reversion zones
• Confirm momentum when price closes outside the bands

Strategy Objective

• Use Marubozu candles to confirm strength of breakout
• Enter when Marubozu closes outside the Bollinger Bands
• Ride the momentum with volatility-based targets

Indicators and Tools Required

• Candlestick chart
• Bollinger Bands (20, 2)
• Optional: RSI or MACD for confirmation

Step-by-Step Strategy Setup

Step 1: Market Context

• Look for consolidation or squeeze in Bollinger Bands (tightening bands)
• Watch for news releases, trend continuation zones, or breakout levels

Step 2: Spot a Marubozu Candle

• Bullish: Strong green candle with little/no wick
• Bearish: Strong red candle with little/no wick
• Ideally, the candle should close above/below the Bollinger Band

Step 3: Confirm Breakout Strength

• Ensure the candle breaks the band with strong body close
• Volume spike or MACD crossover can add confluence

Step 4: Entry

• Enter at the close of the Marubozu candle or next candle open
• Bullish Marubozu: Buy if candle closes above upper band
• Bearish Marubozu: Sell if candle closes below lower band

Step 5: Stop Loss

• Below the low of the bullish Marubozu (for long trades)
• Above the high of the bearish Marubozu (for short trades)
• Alternatively, use 1x ATR below/above the candle for volatility protection

Step 6: Take Profit

• Use 1.5x to 2x risk-to-reward
• Or target the opposite band in mean-reversion markets
• Trail stop behind the Bollinger Band midline for continuation trades

Example: USD/JPY H1 Bullish Setup

• Bands tighten for 6 candles
• Strong bullish Marubozu breaks and closes above upper band at 149.70
• Entry: Long at 149.72
• Stop Loss: 149.25 (below candle low)
• Take Profit: 150.40 (based on 2x risk)

Best Timeframes and Markets

• H1, H4, and Daily
• Forex pairs: EUR/USD, GBP/JPY, USD/CHF
• Indices and commodities like NAS100, XAU/USD, Oil

Optimisation Tips

• Best results after Bollinger Band squeeze (pre-breakout volatility compression)
• Avoid trading if price is already overextended after several Marubozus
• Combine with trendlines or support/resistance for stronger signals

Advantages

• Captures breakout momentum with confirmation
• Works in both trending and consolidating markets
• Marubozu candle provides clear and reliable signal
• Bollinger Bands filter false breakouts and provide structure

Limitations

• Not effective in choppy, sideways conditions
• False breakouts may occur during low liquidity sessions
• Requires fast execution after the Marubozu close

Conclusion

The Marubozu & Bollinger Bands Strategy is a powerful, momentum-based approach that uses clean candlestick patterns and volatility bands to find high-probability breakout trades. By combining price dominance with volatility expansion, it offers a clear framework for riding strong market moves.

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