The term ‘DOJI’ can be interpreted as ‘neutral’, which means that the price movement is neither upward nor downward. The shape of this candlestick pattern resembles like a star which was originally a Japanese term later considered as a star by the Western people. The appears to be a star which is nothing but a candlestick which represents a closing price being somewehere in the similar price range of the opening. There are two types in this formation which are the morning star and evening star. The morning star represents the beginning of a bullish pattern after a bearish outlook, which usually occurs after a recent fall in trend of the prices. Then, there appears a star succeeding which there appears to be a gradual increase in the prices. Based on this theory, the appropriate entry price, stoploss and the target prices are determined. Since there is an upward movement in the prices of the stock, the position to be adopted by the trader is long position.
In line with the above theory, the concept has been applied on the company ‘ TATA STEEL LTD’, during the month of December 2017. There has been a recent fall in prices for the past few days, after a which a DOJI has appeared signalling a rise in prices. This also has the support of good volume of stocks traded during the DOJI day.
