Doji Candlestick Pattern What is a doji? A doji is a single candlestick in which the open and close price are virtually the same, producing a very small or nonexistent body. It often looks like a cross, inverted cross, or plus sign. The Japanese word doji means “the same thing,” reflecting the equality of open and close. What the doji indicates
* Primary signal: market indecision — buyers and sellers are roughly balanced.
* Possible outcomes:
* Trend reversal (more likely when a doji appears after a strong move).
* Continued trend or consolidation (especially if followed by confirming candles).
* Doji is neutral on its own; context and confirmation matter.
Candlestick basics (quick) Each candlestick reflects four prices: open, high, low, close. The body shows the open-close range; shadows (wicks) show highs and lows. Doji have minimal bodies and varying shadow lengths. Explore More Resources
Major doji types
* Dragonfly doji: open, close, and high are at or near the same level, with a long lower shadow. Often read as a bullish sign when occurring after a downtrend.
* Gravestone doji: open, close, and low are near the same level, with a long upper shadow. Often read as a bearish sign when occurring after an uptrend.
* Long-legged doji: long upper and lower shadows with open and close close together. Signals heightened indecision and possible consolidation.
Doji vs. spinning top
* Doji: body is essentially zero (typically body ≤ ~5% of the candle’s total range).
* Spinning top: small but noticeable body; open and close are close but not equal.
Both indicate neutrality, but spinning tops show slightly more conviction in one side than true doji.
How traders use doji
* Look for confirmation: wait for the next candle to confirm direction before acting.
* Use volume and other indicators (RSI, MACD, Bollinger Bands) to validate signals.
* Place stop-losses relative to the doji’s shadows (e.g., above a gravestone’s upper shadow), but be mindful that shadow size can force wide stops.
* Use doji within broader patterns (e.g., star formations, support/resistance tests) rather than in isolation.
Limitations and risks
* Doji are uncommon and provide limited information alone.
* Reversals signaled by doji are not guaranteed; false signals occur.
* Doji do not provide price targets — additional methods are required for exits and profit objectives.
* Large wicks can result in awkward risk-reward or impractical stop-loss placement.
Use in cryptocurrency and other markets Doji behave the same across asset classes: they indicate indecision and require contextual confirmation. Volatile markets (including many crypto markets) can produce many false signals; combine doji analysis with volume and other indicators. Practical checklist for trading a doji
* Confirm trend context (preceding move and support/resistance).
* Wait for a confirmation candle in the anticipated direction.
* Check volume and other technical indicators for agreement.
* Define stop-loss based on shadow extremes and assess risk-reward.
* Plan exits using additional targets or indicators.
Bottom line A doji marks a session where open and close are virtually equal, signaling market indecision. Types (dragonfly, gravestone, long-legged) suggest different potential outcomes, but a doji alone is not a reliable trading signal. Use it as a contextual clue, require confirmation, and pair it with other tools before making trading decisions. Explore More Resources