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Doji Candlestick Patterns

By News Canvass | Jun 01, 2023


  • Dojis are a tool used in technical analysis to find patterns in the price of assets. A trading session is known as a “doji” when a security’s open and close are almost equal, like a candlestick on a chart.
  • The Japanese expression “the same thing” is where the word “doji” originates. A doji candlestick is a sparsely informative neutral indicator. Because they are uncommon, they are unreliable for identifying events like price reversals. There are three main categories of doji formations: dragonfly, long-legged, and gravestone.

What is Doji candlestick pattern

  • As the beginning and closing prices are equal or nearly equal, a Doji candle has a cross-like appearance The term “Doji,” which derives from the Japanese and meaning “blunder” or “mistake,” relates to how uncommon it is for the open and close prices to match perfectly.
  • Doji differs from other candlestick patterns in that it lacks a physical body. With differing high and low values, the opening and closing values are the same. A “Rickshaw Man” is a long-legged Doji with lengthy upper and lower shadows. A Doji is seen as a potential sign of a trend reversal since it frequently forms during an upswing or slump.

How is Doji candlestick pattern formed?

  • When the market starts, bullish traders drive prices up, while bearish traders reject the higher price and push it back down, forming this doji candlestick. It’s also conceivable that bullish traders fight back and raise prices while bearish traders attempt to drive prices as low as they can.
  • The wick is created by the upward and downward movements that take place between open and closure. When the price closes at the same level as it opened, or very close to it, the body is created.
  • As a type of calm before the storm, doji candlesticks have traditionally assisted traders in predicting market bottoms and peaks.
  • For instance, a Doji candlestick that appears during an upswing may be a sign of bullish exhaustion, which is when more buyers start to lean toward the sellers and the trend begins to reverse.
  • It is important to remember that a trend reversal is not always indicated by the Doji pattern. Instead, it reveals traders’ uncertainty about potential developments.
  • Therefore, it is preferable to use additional technical indicators to verify the Doji candlestick indication.
  • The relative strength index (RSI) and/or Bollinger Bands, for example, might offer extra significance to what the Doji pattern says.

What does doji tell traders

  • A special candle that indicates uncertainty in the currency market is the Doji candlestick, often known as the Doji star. Both the bulls and the bears are out of control.
  • The Doji candlestick comes in five different forms, and not all of them signify uncertainty. Because of this, it is essential to comprehend how these candles form and what this can indicate for upcoming price changes in the currency market.
  • The Doji candlestick, also known as a Doji star, represents uncertainty in the cryptocurrency market between buyers and sellers. On a technical analysis chart, this sort of candlestick is verified when the opening and closing prices are almost equal.
  • In plain English, a Doji signifies that the buyers and sellers of an asset balance one another out. By doing this, the sellers are able to frustrate any attempts by the buyers to raise the price. Similar to this, attempts by sellers to drive down prices are thwarted by purchasers.
  • The Japanese term “Doji,” which meaning “error,” is where the name “Doji” originates. The asset’s starting and closing prices are equal, which is an unusual occurrence, hence the pattern derives its name from this fact.
  • In either an upward or downward trending market, a Doji is a sign for market pause and a foreshadowing of a market reversal.

Types of doji candlestick patterns

Neutral Doji

  • The neutral Doji is made comprised of a candlestick with a nearly undetectable body in the center and similar-length wicks on both the top and lower ends. When bullish and negative feelings are evenly balanced, this pattern will manifest.
  • To assist spot probable market tops and bottoms, traders can combine the neutral Doji with momentum indicators like the RSI or Moving Average Convergence Divergence (MACD).
  • An impending market downturn, for instance, may be indicated by a neutral Doji pattern occurring during an upswing and corresponding with an overbought RSI (>70). The candlestick might also signal a market comeback if it appears during a slump and the RSI has become oversold (30).

Long-legged Doji

  • The lengthier wicks on the long-legged Doji indicate that at some point throughout the candle’s duration, both buyers and sellers vigorously attempted to influence the price motion.
  • When looking for a prospective long-legged Doji candlestick, traders should pay close attention to the candlestick’s closing price.
  • Particularly if it is around resistance levels, the Doji is a negative indication if the closing price is lower than the candle’s center. The structure resembles a bullish pin bar pattern, but it is bearish if the closing price is below the centre of the candle.
  • A trend continuation pattern can be implied if the closing price falls exactly in the center. In this situation, it is always possible to forecast future trends by looking at prior candles.

Dragonfly Doji

  • A T-shaped candle with a long lower wick and nearly no higher wick is how the Dragonfly Doji is seen. It indicates that the open, close, and high price are almost equal.

Gravestone Doji

  • An inverted T-shaped candlestick with the open and close falling on the low is what a gravestone doji looks like. The candlestick shows that purchasers made an effort to drive up the price but were unable to maintain the positive momentum.
  • the upswing in which the Gravestone Doji first emerges. It could qualify as a reversal pattern. However, the fact that it occurs during a decline raises the possibility of an upward retracement.

Price Doji, four

  • The Four Price Doji is a pattern that primarily emerges in low-volume situations or for extremely brief periods of time on a candlestick chart. Notably, it resembles a negative sign and implies that the open, close, high, and low prices for a certain time are all at the same level.
  • In other words, the candlestick’s coverage period saw no movement in the market. This particular Doji pattern is unreliable and should be disregarded. It just demonstrates a brief period of market uncertainty.

Doji vs spinning top

  • Doji and spinning tops, which are similar in nature and feature and signify market ambiguity, are now in use. It is referred to as a Doji candlestick if the candlestick’s actual body makes up around 5% of its overall size; otherwise, it is a Spinning Top.
  • Before deciding whether to enter or quit a trade when either occurs on a trading chart, look for additional indicators like Bollinger Bands.


  • Technical analysts claim that the price efficiently represents all of the information that is currently known about the stock since it does so properly.
  • A stock’s current price might not accurately reflect its actual or intrinsic value, and previous price performance does not guarantee future price performance. Technical analysts use techniques to sort through the noise and pinpoint the best bets as a consequence.
  • Four different sorts of data are used to define a candlestick pattern’s form. Using this framework, analysts can infer inferences regarding price behavior.
  • There is an open, a high, a low, and a close on every candlestick. It doesn’t matter what tick interval or period you use. The body of the candlestick design is produced as a filled or hollow bar.
  • Shadows are lines that extend beyond the body. When a stock ends higher than it opened, a hollow candlestick is created. The body of the candlestick will be filled if the stock closes lower. One of the most significant candlestick shapes is the doji.




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