One such pattern is commonly known among traders as the Doji pattern. This guide will discuss the Doji candle, explain what it is and how it works. By the end of it, you will know how to recognize Doji patterns and what they affect price charts.

In Japanese, the word “doji” (which translates as “blunder” or “mistake”) denotes the rarity of an exact match between a closing and opening price. In the end, a transitional candlestick serves as the primary indicator of the market’s bulls’ and bears’ equality and indecision. This time, its open and close prices coincide with the low, forming an inverted T. This suggests that the bulls tried to push the price up but couldn’t sustain the bullish momentum. If this pattern appears during an uptrend, it’s considered a reversal pattern.

Doji Means Indecision

Doji candles are unique candlestick chart patterns that form when the opening and closing prices of the asset are relatively at the same level during a trading session. A member of the Japanese candlestick charts, the https://www.bigshotrading.info/blog/average-directional-index-adx-what-does-this-indicator-mean-and-how-can-it-help-us-trade/ is a single-candle chart pattern. It marks a possible reversal in the market in either an upward or downward direction and opens up a potential trading opportunity. The dragonfly doji candlestick pattern is also similar to the common doji pattern. The only difference is that the opening and closing price ends up near the high of the day. The doji candlestick pattern consists of a single candlestick in which the opening and closing prices are nearly the same.

In Chart 3 above (doji B), the doji moved in the opposite direction from the movement shown in Chart 2. The Double Doji strategy looks to take advantage of the strong directional move that unfolds after the period of indecision. Once you’ve found a strategy that consistently Doji Candlestick Pattern delivers positive results, it’s time to upgrade to a fully funded live account where you can apply your newfound edge. In Japanese, “doji” (どうじ/ 同事) means “the same thing,” a reference to the rarity of having the open and close price for a security be exactly the same.

How do you read a Doji?

One thing to take note is that a Doji has no body on the candlestick pattern. In general, the more complex and sophisticated your Doji trading strategy is, the more likely you are to make informed trading decisions. Just make sure you test what you’re doing if you don’t want to end up in a situation where your account balance is damaged. You should consider whether you understand how ᏟᖴᎠs work and whether you can afford to take the high risk of losing your money. In the description above, we have explained that a doji pattern happens when an asset opens and closes at the same level. Therefore, because of this description, the pattern is often confused with spinning top.

• While a single doji is a candlestick pattern in itself, it’s worth noting that dojis are also part of many multi-candlestick patterns.
• The Doji Candlestick represents a state of ‘rest’ as the bulls and bears fight each other to keep the prices at levels that suit them the best.
• A Doji candle is a type of candlestick formation that appears when the open and close prices are nearly equal and the shadows are sufficiently long.
• A member of the Japanese candlestick charts, the Doji candlestick pattern is a single-candle chart pattern.

There are multiple types of doji candlestick patterns, including the common, long-legged, dragonfly, and gravestone doji. A doji candlestick is formed when the market opens and bullish traders push prices up while bearish traders reject the higher price and push it back down. It could also be that bearish traders try to push prices as low as possible, and bulls fight back and get the price back up.

Types of Doji Candlestick Pattern

As a result, the body is absent or nearly negligible, and the shadow is greater. The wicks on both ends of the body are nearly equal in length, too. Let’s look at some of the differences between these one-bar patterns. Popularly known as the ‘doji candle’, the doji candlestick chart pattern is one of the most unique formations in the world of trading. Learn more about this pattern and find out how you can trade when you recognise it.