What is a Doji Candlestick?

A Doji is a special candlestick pattern that shows indecision between buyers and sellers. It forms when the opening and closing prices are nearly equal, creating a very small or no real body.

Key features:

Open ≈ Close

Has upper and/or lower shadows

Signals market hesitation, no dominant side

Common Types of Doji

Standard Doji

Tiny body with balanced upper and lower shadows.

Long-legged Doji

Both shadows are very long, indicating a fierce battle between bulls and bears. At tops or bottoms, it may signal a strong reversal.

Gravestone Doji

Long upper shadow, little or no lower shadow. Like a tombstone, it often appears at resistance in uptrends, warning of a bearish reversal.

Dragonfly Doji

Long lower shadow, little or no upper shadow. Like a dragonfly, it often appears at support in downtrends, hinting at a bullish reversal.

How to Trade Doji Candlesticks

Don't trade immediately: Wait for a confirmation candle to validate the signal.

If a Doji appears at resistance followed by a strong bearish candle, consider selling.

If a Doji appears at support followed by a strong bullish candle, consider buying.

Combine with indicators like RSI, MACD, or trendlines for higher reliability.

Real-life Example

Suppose EUR/USD is in an uptrend and reaches resistance at 1.1000. A Gravestone Doji appears, followed by a long bearish candle. This is a strong signal to sell.

Common Mistakes to Avoid

Entering immediately after a Doji: It only shows indecision, not a confirmed reversal.

Ignoring market context: Dojis in the middle of a trend are often just pauses, not reversals.

Trusting Dojis blindly: No pattern is perfect; always manage risk.

Content is for reference only, not investment advice. Forex trading carries high risk.

Doji Candlestick - Market Indecision Signal