Doji

A doji is a candle where the open and close are at or very near the same price, producing a tiny body that looks like a cross or a plus sign. It shows that buyers and sellers fought during the period and neither won. On its own, a doji signals indecision. In the right location, such as after a strong trend or at a key level, it can warn that the current move is losing momentum.

Types of doji#

What a doji means in context#

A doji is only as meaningful as its location:

• After a strong uptrend: buyers could not continue pushing higher. A potential warning of a pause or reversal.
• After a strong downtrend: sellers lost momentum.
• At support or resistance: indecision exactly where a reaction is expected adds weight. See Support and Resistance.
• In the middle of a range: usually meaningless; ranges are full of indecision candles.

Confirmation is essential#

A doji says "pause", not "reverse". Traders usually wait for the next candle:

• Bearish confirmation after an uptrend doji: the next candle closes below the doji's low.
• Bullish confirmation after a downtrend doji: the next candle closes above the doji's high.

Without confirmation, many doji are followed by trend continuation. Doji often form part of three candle patterns such as the morning and evening star. See Morning Star and Evening Star.

Trading a doji#

1. Check location: trend extreme or key level, not mid range.
2. Wait for confirmation by the next candle.
3. Enter on the confirmation candle's close or the break of the doji's high or low.
4. Stop beyond the doji's extreme: above the high for a bearish trade, below the low for a bullish one.
5. Target the next support or resistance level.

How doji differ by market#

In stocks, doji are often defined using the body as a tiny percentage of the range, such as under 5% to 10%. In 24 hour markets like crypto and forex, where each candle's open is the previous close, exact doji are common on low timeframes and carry less weight. Focus on daily and higher timeframes for more meaningful signals.

Common mistakes#

• Trading every doji regardless of location.
• Entering before confirmation.
• Ignoring the strength of the trend: in powerful trends, doji are often brief pauses.

Frequently asked questions#

What does a doji candle mean?#

Indecision: buyers and sellers ended the period roughly where they started. Its significance depends on where it appears.

Is a doji bullish or bearish?#

Neither by itself. A dragonfly doji at support leans bullish and a gravestone doji at resistance leans bearish, but confirmation from the next candle matters.

How reliable is a doji?#

On its own, not very. It becomes more useful at key levels, after strong trends and with a confirming candle.

Next, learn two candles with long lower wicks: the Hammer and Hanging Man.