The Doji Candlestick Pattern

The Doji Candlestick pattern

Doji is one of the most important Japanese candlestick patterns, when this candlestick forms, it tells us that the market opens and closes at the same price which means that there is equality and indecision between buyers and sellers, there is no one in control of the market.

See the example below:

As you can see the opening price is the same as the closing price, this signal means that the market didn’t decide which direction will take. When this pattern occurs in an uptrend or a downtrend, it indicates that the market is likely to reverse.

See another example below to learn more:

The chart above shows how the market changed direction after the formation of the Doji candlestick.

The market was trending up, that means that buyers were in control of the market. 

The formation of the Doji candlestick indicates that buyers are unable to keep price higher, and sellers push prices back to the opening price. 

This is a clear indication that a trend reversal is likely to happen. 

Remember always that a Doji indicates equality and indecision in the market, you will often find it during periods of resting after big moves higher or lower. 

When it is found at the bottom or at the top of a trend, it is considered as a sign that a prior trend is losing its strengths. 

So if you are already riding that trend it’s time to take profits, it can also be used as an entry signal if it is combined with other technical analysis