Candlestick Pattern – Part 2
3. Doji Candle
The term “Doji” comes from Japanese and literally means “the same thing.” In candlestick charting, a Doji forms when a security’s opening and closing prices are virtually the same — meaning there’s no clear winner between buyers and sellers.
Visually, a Doji looks like a cross or plus sign, because the body of the candle is very small (almost just a line), while the upper and lower wicks (or shadows) can be long, short, or even nonexistent.
What Does a Doji Pattern Mean?
A Doji pattern represents indecision or uncertainty in the market. It shows that during the trading session, both buyers and sellers were active, but by the end of the session, the price settled back to where it started.
It often signals a pause in a trend
It can be a warning sign that the current trend may be losing strength
But by itself, a Doji is not a strong buy or sell signal — traders usually wait for confirmation from the next candle or pattern before making a move
How Do Traders Use a Doji?
Because it reflects a balance between buying and selling pressure, traders interpret a Doji as a sign to:
Slow down and reassess
Wait for the next candle to confirm whether the market wants to reverse, continue, or just stay flat
Key Takeaway
A Doji doesn’t tell you what will happen next — it tells you to pay attention.
Here’s a breakdown of the main types of Doji candles:
🟠 1. Standard Doji
Shape: Looks like a plus sign
+Open ≈ Close, with both upper and lower shadows of roughly equal length
Meaning: General indecision — neither bulls nor bears are in control
Context matters: In an uptrend, it could hint at a reversal; in sideways markets, it may just signal hesitation
🟢 2. Dragonfly Doji
(Visual: Long lower wick, little to no upper wick)
Open ≈ Close at the top of the candle
Long lower shadow, no (or very small) upper shadow
Interpretation: Bears pushed prices down, but bulls regained control by close
Bullish reversal signal if found after a downtrend
🔴 3. Gravestone Doji
(Visual: Long upper wick, little to no lower wick)
Open ≈ Close at the bottom of the candle
Long upper shadow, no (or very small) lower shadow
Interpretation: Bulls drove prices higher, but bears took control and pushed prices back down
Bearish reversal signal if seen after an uptrend
🔵 4. Long-Legged Doji
Open ≈ Close, but with very long upper and lower shadows
Shows strong indecision with high volatility — buyers and sellers were both aggressive, but canceled each other out
Common near key support/resistance levels or during market consolidation
🟣 5. Four Price Doji (very rare)
Open = High = Low = Close
Literally no price movement — looks like a flat horizontal line
Usually appears in low-volume or illiquid markets
Often ignored unless seen on very low timeframes
✅ How to Use Them (General Tips)
| Type | Potential Signal | Stronger When… |
|---|---|---|
| Dragonfly Doji | Bullish reversal | After a downtrend, confirmed by next candle |
| Gravestone Doji | Bearish reversal | After an uptrend, confirmed by next candle |
| Long-Legged Doji | Uncertainty/Volatility | Near support/resistance zones |
| Standard Doji | Neutral/Wait | Paired with trend context |
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