Doji
Candlestick PatternsA candlestick where the open and close are virtually equal, forming a cross or plus shape. It signals market indecision and a potential reversal.
What Is a Doji?
A doji forms when buyers and sellers battle during a trading period but neither side wins. The result is a candle with a very small or nonexistent body, meaning the opening and closing prices are nearly identical. The upper and lower wicks show the range of price movement within the session.
You will see doji candles frequently on EUR/USD and GBP/USD charts, particularly around major economic releases when the market has not yet decided on direction.
How to Trade a Doji
A doji on its own is not a trading signal. Its meaning depends entirely on context. After a sustained Uptrend, a doji suggests buying pressure is fading and a reversal may follow. After a Downtrend, it can signal that sellers are losing control.
Traders typically wait for confirmation: the candle following the doji should close in the expected reversal direction before entering a trade. Combining a doji with Support or Resistance levels strengthens the signal considerably.
Limitations
Doji candles are common and most do not lead to reversals. In ranging or low-volatility markets, they appear frequently with no directional significance. Always use additional confirmation such as volume, trend context, or a nearby support/resistance zone before acting on a doji.
Related Terms
Dragonfly Doji
A doji candlestick where the open, close, and high are at the same level with a long lower wick. It signals bullish rejection when appearing at the bottom of a downtrend.
Gravestone Doji
A doji candlestick where the open, close, and low are at the same level with a long upper wick. It signals bearish rejection when appearing at the top of an uptrend.
Long-Legged Doji
A doji with very long upper and lower wicks, showing extreme indecision as the price swung widely in both directions before closing near the open.
Spinning Top
A candlestick with a small body centered between relatively long upper and lower wicks. It signals indecision, with neither buyers nor sellers controlling the session.
Hammer
A bullish reversal candlestick with a small body at the top and a long lower wick at least twice the body length. It appears at the bottom of a downtrend.