Doji in Candlestick Reversal Pattern

  • Doji candle has zero or almost zero range between its open and close. Rather than implying potential reversal or the clear dominance of either bears or bulls, these candles suggest indecision or balance between the two forces.
  • Neither buyers nor sellers are fully in control. A doji that occurs in the context of a strong trend implies the weakening of the dominant force that resulted in that trend. A “long-legged doji” has long wicks in both directions, implying strong, balanced pressure from both buyers and sellers.
  • The “dragonfly” and “gravestone” doji imply, respectively, that sellers and buyers controlled the market for most of the trading period, but then the opposite group managed to push price back to the open before the close.
  • While tradition and long-legged dojis are reflective of indecision and stalling, gravestone and dragonfly are generally clearer, stronger indicators that a force is stepping in to push the market in the direction of the wick and away from the body.
  • Gravestone and Dragonfly dojis are similar to hammer and hanging man patterns, which are discussed later in this guide.

Types of Doji Candlestick Pattern

Here we will give you the main points about the different types of Doji patterns, namely the Common Doji, Gravestone Doji, Dragonfly Doji and Long-Legged Doji.

Let’s discuss about them:

1. Neutral Doji

  • This is the most common type of Doji candlestick pattern.
  • When buying and selling are almost the same, this pattern occurs.
  • The future direction of the trend is uncertain as indicated by this Doji pattern.

2. Long-Legged Doji

  • As the name suggests this is a long-legged candlestick pattern.
  • When the supply and demand factors are at equilibrium, then this pattern occurs.
  • The trend’s future direction is regulated by the prior trend and Doji pattern.

3. Gravestone Doji

  • This pattern is found at the end of the uptrend when supply and demand factors are equal.
  • At the day’s low, the candlestick opens and closes.
  • The future direction of the trend is regulated by the prior trend and Doji pattern.

4. Dragonfly Doji

  • This pattern appears at the end of the downtrend when the supply and demand factors are at equilibrium.

One Response

  1. Very good explanation of dozi and few more charts could have been shown.

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