Doji
A doji is a candlestick where the open and close are nearly equal, forming a cross shape that signals market indecision and a potential trend change.
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How to Identify
The open and close prices are at or very near the same level
The candle forms a cross or plus-sign shape with upper and lower shadows
It appears after a sustained trend move, either up or down
A long-legged doji has long shadows on both sides, showing significant indecision
A dragonfly doji has a long lower shadow with no upper shadow, similar to a hammer
Trading Rules
Entry Rules
- Never trade a doji in isolation, always wait for the confirmation candle
- Enter when the next candle closes in the expected reversal direction
- Combine with key support or resistance levels for higher probability
- Look for doji candles with above-average volume for stronger signals
Exit Rules
- Place stop-loss beyond the doji's extreme shadow in the direction of risk
- Target the nearest support or resistance level
- Use a minimum 1.5:1 risk-reward ratio based on the doji range
Target the next significant support or resistance level. Alternatively, use the total range of the doji candle as a minimum move from the entry.
For a bearish reversal doji, stop above the doji's high. For a bullish reversal doji, stop below the doji's low.
Journaling Tips
Record the doji type (standard, long-legged, dragonfly, gravestone) and note which types work best
Track the support or resistance level where the doji formed
Note the trend length before the doji appeared to assess exhaustion
The doji is a candlestick that represents perfect market indecision. When the open and close are at the same level, it means neither buyers nor sellers won the period. This equilibrium often precedes a change in direction.
Types of Doji
Standard doji: Small to no body with relatively equal upper and lower shadows. This is the classic indecision signal.
Long-legged doji: Very long shadows on both sides with a small body in the middle. This shows extreme volatility and indecision, often appearing at major turning points.
Dragonfly doji: Long lower shadow with no upper shadow. The open and close are at the high of the candle. This is bullish when it appears at support.
Gravestone doji: Long upper shadow with no lower shadow. The open and close are at the low of the candle. This is bearish when it appears at resistance.
When Doji Patterns Matter
Not every doji is significant. The ones that matter form under specific conditions:
- After extended trends: A doji after 5-7 trending candles signals exhaustion
- At key levels: Support, resistance, Fibonacci retracements, or moving averages
- With volume spike: Higher volume shows the battle between buyers and sellers was intense
- At the end of a session: Daily doji are more significant than intraday doji
The Confirmation Rule
A doji is a warning, not a signal. You must wait for the next candle to confirm:
- After a doji at resistance, a bearish confirmation candle (close below the doji low) triggers a short
- After a doji at support, a bullish confirmation candle (close above the doji high) triggers a long
Trading without confirmation is the most common mistake with doji patterns.
Doji Star Combinations
Doji candles become more powerful when they appear as part of multi-candle patterns:
- Morning doji star: Bearish candle, doji gap down, bullish candle gap up (bullish reversal)
- Evening doji star: Bullish candle, doji gap up, bearish candle gap down (bearish reversal)
These three-candle patterns are among the most reliable reversal signals in candlestick analysis.
Journal Tracking
Record the specific doji type, location, volume, and the confirmation candle. Over time, you will find that certain doji types at certain levels produce significantly better results than others, allowing you to focus your trading on the highest-probability setups.
Common Mistakes
Trading the doji candle itself without waiting for confirmation
Treating all doji candles as reversal signals regardless of context
Ignoring the doji type, each variation has different implications
Frequently Asked Questions
Is a doji bullish or bearish?
A doji by itself is neither bullish nor bearish. It signals indecision. The context determines the implication. A doji after an uptrend suggests potential bearish reversal. A doji after a downtrend suggests potential bullish reversal.
What are the different types of doji?
The main types are: standard doji (small body, equal shadows), long-legged doji (very long shadows on both sides), dragonfly doji (long lower shadow, no upper shadow), and gravestone doji (long upper shadow, no lower shadow).
How accurate are doji patterns?
Doji accuracy depends heavily on context. At key support or resistance levels with volume confirmation and trend exhaustion, they can be highly reliable. In the middle of a range or trend, they often produce false signals.
Start Tracking Your Patterns
Journal every pattern trade to discover which setups actually work for you.
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