📌 What is a Doji Candlestick Pattern?
The Doji candlestick pattern is one of the most powerful and commonly used candlestick formations in technical analysis. It represents market indecision, where the opening and closing prices are almost the same, forming a cross or plus sign-like candle.
This pattern often signals a possible trend reversal or pause, especially after a strong bullish or bearish move.
🧠Key Characteristics of a Doji Candle:
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Open ≈ Close
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Small or no body
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Long upper and lower shadows (wicks)
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Indicates market confusion between buyers and sellers
📊 Types of Doji Candlestick Patterns:
There are 4 major types of Doji candles:
1. Standard Doji
Looks like a perfect cross; equal upper and lower shadows. Appears in both uptrends and downtrends.
2. Gravestone Doji
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Long upper shadow, no lower shadow.
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Indicates bearish reversal.
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Appears at the top of an uptrend.
3. Dragonfly Doji
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Long lower shadow, no upper shadow.
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Indicates bullish reversal.
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Appears at the bottom of a downtrend.
4. Long-legged Doji
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Long upper and lower wicks.
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Suggests high volatility and market confusion.
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Confirmation needed from next candle.
🧾 How to Trade Using Doji Candlestick?
✅ In Uptrend:
If a Doji forms after a strong rally, it may signal a trend reversal. Traders should wait for a bearish confirmation candle (like a red candle closing below Doji low) before shorting.
✅ In Downtrend:
If a Doji forms at the bottom, it indicates that selling pressure is weakening. Wait for a bullish confirmation candle before entering long positions.
📌 Tip: Always use Doji with volume analysis, support-resistance, or indicators like RSI, MACD for better accuracy.
🛡️ Risk Management:
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Always use stop loss below the wick (for buy) or above the wick (for sell).
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Don’t trade Doji alone – wait for confirmation.
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Avoid in sideways or low-volume markets.
📈 Final Thoughts with example:
The Doji candlestick is a simple but effective signal in price action trading. It helps identify key turning points in the market. When combined with other technical tools, it can become a high-probability setup for intraday and swing traders.
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