BASICS OF DOJI CANDLESTICK || 10% to TFC

In a simple definition, Doji candlestick can be defined as a neutral pattern candlestick that its open and close are equal to each other. This means that a Doji candlestick lacks body.

This candlestick always strikes a suggestion of trend reversal at a breakout when a trader takes technical analyst into consideration. Whenever a Doji appears, traders understand that at the timeframe, both buyers and sellers struggle to dominate the market was futile. Thus, flex a momentum.

Types of Doji candlestick

The Doji candlestick have different types and they are most time called Doji family.

The five types of Doji candlestick are;

• Star Doji
• Dragonfly doji (aka butterfly doji)
• Gravestone doji
• Long-legged doji
• Four price doji

Although all these Dojis belongs to a simple neutral pattern, they all have different impact in trade.

Let’s take a look at each of them;

Doji Star (Neutral doji)

This doji name is derived from a star sign because of it same look. Just like the general nature, the open and close value are equal but specifically at the center. This makes it a doji with equal tail and indicate that at the particular time, buyers dominates the market and equally loose to sellers. This makes Doji Star the most regarded neutral candlestick pattern.

link

Long-legged doji

This type of Doji is almost similar to Star Doji but with a very slight difference in tail which is increase in size. Unlike Star Doji that the volatility of buyers are sellers was high, long-legged doji shows that it was a bit high. it is still a neutral pattern.

Source


Four price doji: This doji anatomy is like a dash shape ( —— ) as there is no existence of both upper and lower tail. This candlestick signifies that the four prices value I.e open, high, low and close are equal.

source

Gravestone doji

This type of Doji is an inverse of dragonfly doji. It anatomy makes it look like an upside down capital letter T. This means that it have a long upper tail and no lower tail.
This doji occurs when buyers dominates for a long time but at the end, sellers pulled the price down and close at same value.

link

Dragonfly Doji (aka Butterfly doji)

The formation of this candlestick occurs when there’s an opening of the price at high. Hence, still close at that point. Dragonfly Doji candlestick anatomy comprises of a lower shadow (usually long) without an upper shadow.

link


The easiest way to describe a dragonfly candlestick is to compare it shape with letter T because of similarities.
This doji signifies that at opening, sellers dominated buy buyers later took over and close the price at same value.

The dragonfly doji is always regard as bearish reversal signal. However, in order to confirm this movement, a trader have to wait for another candle to close at higher price too be been sure of the reversal. It is further believe a bullish trend will grow stronger if a dragonfly doji appears.

Note: Gravestone doji and dragonfly doji (aka butterfly Doji) are inverse of each other)


In order to grow in trading practice using technical analysis, understanding Doji candlestick is very important. Doji helps in spotting trends reversal. However, the signal is not advisable to accept except the next candlestick close over it in a bullish reversal and below it in a bearish reversal.

Major reference

Dailyfx.com
investopedia.com

[About me]