Doji
It opened and closed at almost the same point. Nobody won — the market is thinking it over.
Doji — what it is?
A doji is a candle whose open and close almost coincide. The body compresses into a line, the wicks can be anything.
It means equilibrium: over the period neither side achieved a result. In itself that's neither a reversal nor a continuation.
How informative it is depends on location. A doji after a long impulse says the move has stalled, a doji inside a range says nothing at all.
Doji — how it is built?
The body is less than roughly a tenth of the total range of the candle. The variants are told apart by the wicks: long wicks on both sides mean a fight, one long wick means the level was rejected.
Doji — common mistakes
Treating a doji as a reversal signal. It's a pause, not a turn.
Hunting for them on lower timeframes, where almost every other candle is close to a doji.
Entering off a doji with no zone and no structure.
Ignoring that a doji at the edge of a range and a doji in the middle of it mean different things.
Related to
Glossary
- candle
- the element of the chart that shows four prices for a period: open, high, low, close.
- open
- the first price of the period.
- close
- the last price of the period. Considered the most important of the four: breakouts are confirmed by the close.
- candle body
- the rectangle between the open and the close.
- equilibrium
- the middle of the range, the 0.5 level.
- long
- buying in expectation of a rise.