Doji
Key Takeaways
- 01.The open and close prices are virtually identical.
- 02.It represents temporary balance and indecision between bulls and bears.
- 03.A Doji is not a standalone buy/sell signal; it requires context and confirmation from the following candle.
- 04.Different types (Dragonfly, Gravestone, Long-legged) carry specific bullish or bearish biases.
Why it matters
When a Doji appears after a strong trend, it warns that the prevailing momentum is stalling. If an asset has been in a steep uptrend, a Doji indicates that buyers are losing their grip, raising the probability of a reversal or consolidation.
When it matters
Doji candles are most meaningful when they occur near major support or resistance levels, or when the market is in overbought or oversold territory.
A cross-shaped candle where the open and close are at the same level, flanked by upper and lower shadows.
Hover over the Doji candle on the chart to inspect the open and close values.
Common Mistakes
Trading immediately on the Doji close
A Doji signifies indecision, not a reversal. Entering a trade immediately on the Doji close without waiting for the next candle's confirmation leads to trading false signals.
Ignoring Doji variants
A Dragonfly Doji (long lower wick) has a bullish bias, while a Gravestone Doji (long upper wick) has a bearish bias. Treating all Dojis as strictly neutral ignores these key structural differences.
📖 Real-World Example: A weekly trend pause
In late 2022, a major commodity ETF rose for six consecutive weeks. On the seventh week, it printed a prominent Doji at its multi-year resistance line. The following week close was deeply red, confirming the Doji's warning and preceding a 12% correction.