What is a doji candlestick ?

A doji candlestick is formed when the open and close are the same or very close to equal. It forms a candlestick that looks like a cross or a plus sign.

The doji is neither bullish or bearish. Doji are important candlesticks on their own or in a group of candlesticks that form a candlestick pattern. Alone, they can be an indication of equality between buyers and sellers. Possibly signaling the end of the current trend. They serve as a warning sign when viewed by themselves. A warning that change may be on the horizon.

Doji are more important when they appear among candlesticks with long real bodies than they are when they appear among candlesticks with short real bodies. In other words doji are more relevnant in a strong trending stock than in a stock moving sideways or no clear direction.

Long-legged Doji Candlestick

Long-legged doji have long upper and lower shadows that are about the same length. These doji show a lot of indecision in a stock. Long-legged doji opens, moves much high, and much lower, then ends up closing about the same place it opened. A lot of movement, but very little change.

Dragon Fly Doji

Dragon fly doji occur when the open, high and close are the same and the low of the period makes a long lower shadow. This candlestick looks like a capital T. Dragon fly doji show us that after the open sellers stepped in and took control, driving the price down, but before the close, buyers took control and rallied back to the opening price.

When the dragon fly doji appears in a down trend it could signal a reversal, especially when accompanied by a buy signal from an indicator, or a bounce off of a support or trend line.

Gravestone Doji

Gravestone doji occur when the open, low and close are the same and the high of the period makes a long upper shadow. This candlestick looks like an upside down capital T. Gravestone doji show us that after the open buyers stepped in and took control, driving the price up, but before the close, sellers took control and drove the price back down to the opening price.

When the graveyard doji appears in an uptrend it could signal a reversal, especially when accompanied by a buy signal from an indicator, or a bounce off of a support or trend line.

Leave Doji Candlestick and go back to Japanese Candlestick Charts.