The Complete Guide To Using The Doji Candlestick Pattern

This will be a great introduction into different types of Doji, and also a great candlestick pattern strategy that will help you trade as fast as the market changes. A doji can be both bullish and bearish depending if they are found in an uptrend or a downtrend. Typically doji’s make up two candlestick patterns called star patterns. Many of times they end up completing evening stars which are bearish and also morning stars with are bullish reversals.

Today, we’re looking at the long legged doji candlestick pattern. Neither the Neutral Doji, the Long-Legged Doji, or the 4-Price Doji tells you very much about what the markets might do next. Depending on what the preceding candlestick patterns are telling you, it may indicate a price reversal.

Profit Targets For The Gravestone Doji Pattern

The next day closes below the midpoint of the body of the first day. Doji form when the open and close of a security are virtually equal. The length of the upper and lower shadows can vary, and the resulting candlestick looks like either a cross, inverted cross or plus sign. Doji convey a sense of indecision or tug-of-war between buyers and sellers.

The narrow stick represents the range of prices traded during the period while the broad mid-section represents the opening and closing prices for the period. The Doji’s Dragonfly is when trading opens at the high of the day, trades lower, and the closes at the open price. At the top of a trend, it is a variation of the Hanging Man. A Neutral Doji is a small candlestick pattern where the price opens and closes in the middle of the day’s high and low.

what is doji candlestick pattern

Price moves up and down during that trading day but close near or even at the opening price. The Doji candlestick, also known as the Doji star, is a special candle in the forex market that indicates indecision. However, there are five different types of Doji candlesticks, and not all of them show indecision. That is why it is critical to comprehend how these candles shape and what this might mean for potential forex market price changes. A three-day bearish reversal pattern similar to the Evening Star. The next day opens higher, trades in a small range, then closes at its open .

The 5 Different Types Of Doji Candlestick Patterns

Some observers have interpreted this as a symbol of turnaround. It may, however, be a period when buyers or sellers are gathering traction for a longer-term trend. Doji patterns are typical during times of restructuring and can help investors spot possible price breakouts.

Is a doji candle bullish?

The Bullish Doji Star appears in a downtrend and belongs to the bullish reversal patterns group. Its occurrence should be confirmed on the following candles. This pattern is characterized by a gap between the first candle’s low and the following candle’s high or between bodies of these two candles.

In fact, a candlestick chart can tell you a lot about the price action of a stock at a glance. A bearish reversal pattern that continues Complementary currency the uptrend with a long white body. The next day opens at a new high, then closes below the midpoint of the body of the first day.


A bearish Doji Star is a signal that shows the end of an uptrend and start of a bearish reversal leading to decreasing the prices. Therefore, it is a wise move to sell the stock whenever a bearish Doji Star pattern appears. The bullish Doji Star pattern is a three-bar Wall Street formation pattern that develops during a downtrend. The first bar has a long black body, the second bar opens even lower. It closes just like a Doji pattern with a small range of trading. The triangle patterns are common chart patterns every trader should know.

  • Dragonfly and gravestone Doji’s make great reversals signals, but the Doji star and long-legged Doji are also great warning signs a reversal could be about to begin.
  • Prices move above and below the opening level during the session, but close at or near the opening level.
  • Buyers were able to withstand the selling and push the price up.
  • A doji candle is dominated by wicks with very small bodies or no bodies at all.
  • If price reverses, you get into a profitable reversal trade.

This often leads to prematurely being stopped out of your trades. Very small body, centered between the upper and lower wicks. You need a well-detailed trading plan to face the smart money aka hedge fund managers and institutional investors. As a retail trader, you need to step up your game and we’re here to facilitate that road for you. The candlestick map was created in the 18th century by a Japanese rice merchant called Honma from the town of Sakata, and it was brought to the West in the 1990s by Steve Nison. Aside from the Doji candlestick mentioned earlier, there are four other Doji candlestick variants.

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After a downtrend, there is a doji, signaling that the trend might be ending. As previously discussed, after a downtrend, it is better to wait for a bullish day to confirm the reversal. The price gapped up the next day, leading to an uptrend that lasted for over 4 months. You can use this bullish day as an entry point for this stock.

what is doji candlestick pattern

Second, we need the Doji candle to be contained inside the price range of the previous pattern. Basically, this will lead to the formation of another pattern called an inside bar. The only technical tool we would need for the Doji trading strategy is a 14-period simple moving average plotted on the daily time frame. A day trader is going to trade a stock multiple times in one day. The patterns, trends and candlesticks on an intraday chart will tell them something different than a swing trader. Candlesticks are super important in the fact that you findsupport and resistancethrough their wicks and real bodies.

What Is A Doji Candlestick Pattern?

Many newbies make the common mistake of spotting a single candle formation without taking the context into consideration. Therefore it pays to understand the ‘story’ that each candle represents in order to attain a firm grasp on the mechanics of candlestick chart patterns. These patterns tend to repeat themselves constantly, but the market will just as often try to fake out traders in the same vein when the context is overlooked. Candlestick charts tend to represent more emotion due to the coloring of the bodies. It’s prudent to make sure they are incorporated with other indicators to achieve best results.

what is doji candlestick pattern

This pattern can be considered the opposite of the Dragonfly. Here, the open and close prices remain at the lower end of the trading doji candlestick pattern range. It shows that the buyers were able to push the prices up but failed to sustain this bullish momentum when the candle closed.

It is a reversal candlestick pattern that can appear in either an uptrend or a downtrend. Doji candlestick pattern is a clear sign of equilibrium or neutrality. It strongly suggests that neither sellers nor buyers are gaining in this state of indecision.

Awesome Doji Candlestick Patterns Explosive Profits

If they are found in early stages of a trend, the chances of a reversal are lower. Also, they are considered only if they are formed in trending conditions, since ranging conditions typically mean indecision. If the market is seeing a continuation of the previous trend, after the Doji pattern forms, it could indicate a fake reversal pattern. This could be considered an opportunity to add on to a previously long trade.

As mentioned above, the other two types of doji patterns are the gravestone doji and the long-legged doji. The gravestone doji is in the reversed shape of the dragonfly. The low, open, and close prices of a gravestone doji are at the same level. Same as the dragonfly, the gravestone doji also indicates potential price reversals and requires confirmation candlesticks. A dragonfly doji can be an indicator of a reversal in price. When the price of a security has shown a downward trend, it might signal an upcoming price increase.


The above chart of MYOK shows a Doji’s Dragonfly after a downtrend. It is followed by a bullish candle, giving us a buy signal. The stock reversed and continued to go up for about a month. For example, if the stock is in the early stages of an uptrend or downtrend, then it is unlikely that the doji is signaling its peak or its bottom. The Doji star doesn’t form often in forex – it’s much more common in stocks and other markets.


Perico de los palotesThe Complete Guide To Using The Doji Candlestick Pattern
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