Doji

On a price chart the Doji candlestick is a single candle pattern where by the opening and closing prices are equal. That is, price rises and falls above and below the open but fails to close at a significant distance away from the opening price.

Characterised by being small in length – denoting a small trading range – a Doji pattern formation is a representation of indecision between buyers and sellers in the market and as an isolated pattern, is a neutral pattern. Any bullish or bearish bias is based on preceding price action and confirmation candles.

Typically used as to identify price weakness when found at the top of an uptrend or bottom of a downtrend and signalling a potential trend reversal, the Doji is one of the most common candlestick patterns.

While the length of the upper and lower wick (also known as the shadow or tail) of the Doji can vary resulting in the appearance of the Doji to be viewed as a cross, inverted cross or plus sign, traders cab find the Doji on the price chart in a number of different variations including: Dragonfly Doji, Gravestone Doji, Long-Legged Doji, Four Price Doji.

 

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