TRADING GLOSSARY

Doji: the candlestick of indecision

A doji is a candlestick where the open and close are virtually identical, creating a very small or non-existent body. It signals that neither buyers nor sellers gained control during the period — the market is undecided.

Types of doji

Standard doji: Small body with roughly equal upper and lower wicks. Dragonfly doji: Open and close at the top of the range with a long lower wick — sellers pushed price down but buyers reclaimed it all. Bullish implication at support. Gravestone doji: Open and close at the bottom with a long upper wick — buyers pushed price up but sellers drove it back down. Bearish implication at resistance. Long-legged doji: Very long wicks in both directions — extreme indecision with volatile swings in both directions.

How to trade doji patterns

A doji alone is not a trade signal. Its significance depends on context. A doji after a prolonged uptrend suggests the buying momentum is exhausting — a reversal may follow. A doji after a prolonged downtrend suggests selling pressure is fading. Always wait for the next candle to confirm the direction before acting on a doji. A doji followed by a strong bearish candle confirms a bearish reversal. A doji followed by a strong bullish candle confirms a bullish reversal.

AskTrade identifies doji patterns at key levels and integrates them with other signals for higher-probability setups.

Disclaimer: This is for educational purposes only and does not constitute financial advice. Trading involves significant risk of loss.

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AskTrade analyses are AI-generated and do not constitute financial advice.