Forex Glossary

Doji

A Doji is a single candlestick pattern generated when the opening and closing prices are both equal.

The lack of a physical body portrays a sense of indecision or tug-of-war between buyers and sellers, and the power balance may be shifting.

The length of the top and lower shadows can vary, resulting in a candlestick that resembles a cross, an inverted cross, or a plus sign.

The Doji is normally regarded a neutral pattern on its own, although it is part of multiple-candlestick patterns.

The Doji candlestick is the smallest and most basic of all candlesticks, making it very easy to recognize. Look for the following characteristics:

  • The open and close of the candlestick must be at (or near) the same price level, resulting in a Doji that either lacks or has a very little body.
  • a must be an upper, lower, or both shadows.

The Doji’s horizontal line indicates that the open and close occurred at the same level.

The Doji’s vertical line indicates the timeframe’s overall trading range.

Explanation:

The shape of the Doji represents buyer and seller uncertainty.

When you notice a Doji candlestick pattern, it means that the session ended extremely close to where it began, which is why the candle lacks a body.

Indecision reigns since neither the buyers nor the sellers have control.

A “tug-of-war” is taking place, in which neither party is dominant.

Although the price varied during the session, it was eventually driven back to its opening price.

The moment of uncertainty means a trend reversal.

If the market is not obviously trending, a Doji is less meaningful, as sideways or choppy markets indicate indecision.

If the Doji occurs during an upswing, it is considered noteworthy since it indicates that buyers are losing confidence.

If the Doji appears during a decline, it is considered noteworthy since it indicates that the sellers are losing confidence.

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