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DOJI means neutral and it is a powerful and reliable candlestick pattern. DOJI appears after significant rise or fall in price with high volume. This candlestick pattern will be in the form of star, where the starting and ending price of the day is almost the same. DOJI is the indication of reversal trend and can be used for creating long/short position based on whether it is bullish or bearish.
The Doji is a commonly found pattern in a candlestick chart,it is characterized by being small in length—i.e,a small trading range, with an opening and closing price that are virtually equal.
Doji is a key trend reversal indicator, if it appears at the top of a trend, in an overbought area, we can create short position and if is is seen at the bottom of an extended downtrend we can create long position.
Note* – After the Doji is formed we need to wait to get the confirmation of the reversal trend before taking positions.
After a downward or a upward movement there is a pause in the trend which is neutral signified by a doji which indicates a trend reversal. When doji appears with a significant volume the reward can be 1.5 x more than the risk.
DOJI means indecision THIS is a powerful one day reversal pattern which can appear at both UP as well as DOWN trend to indicate a reversal
IF THE MARKET is moving side ways then appearance of DOJI has no significance
IN DOJI the opening and closing price remains same with a lower and upper shadow
VOLUME is high on the doji day
so whether the market is in up or down trend presence DOJI caution the trader about a reversal of the existing trend
However confirmation of the market on the NEXT DAY alone assures the reversal
WHEN confirmed
BUY IF THE REVERSED TREND IS BULLISH AT THE TOP OF THE DOJI (STOP LOSS AT THE BOTTOM OF THE DOJI)
SELL IF THE REVERSED TREND IS BEARISH AT THE BOTTOM OF THE DOJI(STOP LOSS AT THE TOP OF THE DOJI
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