Doji Candlestick Pattern

The doji is a generic terms of sorts for a neutral candlestick. They tend to come in various shapes and sizes, and at the end of the day really all that matters is that the market opening closes at the same price. They tend to be ignored for the most part, unless of course they form at support or resistance levels, which is exactly where you should be looking for any trading signal to begin with.

Doji candlestick.

Doji candlestick.

This candlestick formation shows that the market is currently going nowhere, and at the end of a trend it can mean that momentum is running out. However, if you see several of them in a row, it can simply mean that the market is currently thinking about something. For example, you will see them often appear ready for major economic announcements such as the Nonfarm Payroll Numbers out of the United States. Very few traders want to get involved in the Forex market before the employment numbers come out of the United States, as they can move the market so wildly.

On the following chart, you can see that there are actually two separate trades that show up in this marketplace. You can see that we formed a doji at a supportive level, and once we broke the top of that range from the candle, the market when much higher. However, as we went further into the uptrend, you can see that we formed at least three dojis later on, and that they signify that the market was debating on what was going to do next as no real momentum was seen. Once we broke to the upside with an impulsive candle, the uptrend continued and gained strength.

Examples of using dojis.

Examples of using dojis.

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