Doji candlestick pattern

The opening and closing prices of the commodity are equal in this pattern.

This pattern consists of a single candle.

The Doji candlestick pattern usually looks like a cross, inverted cross or plus sign.

When the buyers and sellers fail to take a decision in the commodity market, it gives rise to Doji pattern.

Classification of Doji pattern

The candlestick pattern can be classified into four types.

1.Neutral Doji

2.Long-Legged Doji

3.Gravestone Doji

4.Dragonfly Doji


Enrich Broking: Candlestick Pattern

1. Neutral Doji

This is a small candlestick pattern.

When the “buying and selling is at equilibrium”, this pattern occurs.

At the middle of the day’s high and low, the commodity opens and closes.

The future direction of the trend is regulated by the prior trend and the Doji pattern.

2.Long-Legged Doji

As the name suggests this is a long candlestick pattern.

When the “supply and demand” factors are at equilibrium, this pattern occurs.

At the middle of the day’s high and low, the commodity opens and closes.

The trend’s future direction is regulated by the prior trend and Doji pattern.

3.Gravestone Doji

This pattern gives rise at the bottom of a downtrend when supply and demand factors are at equilibrium.

At the day’s low, the commodity opens and close.

The future direction of the trend is regulated by prior trend and Doji pattern.

4.Dragonfly Doji

This pattern gives rise at the peak of an uptrend when the supply and demand factors are at equilibrium

At the day’s high, the commodity opens and closes.

Inference from Doji pattern

Doji patterns are helpful to identify trends.

When it gives rise at the support level, it can be treated as an “entry point.”

When it gives rise at the resistance level, it can be treated as “exit point.”

To ensure that our trading strategy is effective, it’s always recommended to mix and match the patterns and indicators.

Use of Candlestick Pattern

Candlestick patterns are the most versatile of indicators to intraday and swing traders as they are the best soldiers for cautioning reversals, flagging off entry points and defining cut losses, all in one gambit.

Many a times just a single candle eg. Doji candlestick pattern or a series of sticks eg. Three black crows, can equally indicate effective signals to give some of the Best candlestick patterns that optimise profits in each of their different strategies. To the trained eye, these eye-catching bars and sticks start making trading meaning and soon catching potential in each of their appearance, becomes a good probability for profit.

How to Read Candlestick Chart patterns for Intraday Trading

Intraday Trading, more than in any other kind of timeframe, needs technical tools like the Candlestick pattern to catch a trend (whether continuation or pull backs) at the earliest opportunity. The sheer number of true, trade signals that some of the best candlestick patterns indicate, give a lot of chances to enter trades for the intraday trader. Be it the ‘body’ or the ‘shadow’, every component of what constitutes a candlestick, is a pointer to what the sentiment is currently flowing through the veins of the market participants. For example, a Doji candlestick pattern could go either way in intraday trades, depending on the preceding candles, which could show a bullish or bearish transition.

How to trade the doji candlestick?

A Doji candlestick pattern stands for the indecisive nature of the market participants. This is apparent by the fact that the Opening and Closing prices for the period are the same or close to each other in the candlestick pattern. Hence in order to interpret this type of a candle the trader must look at the preceding series of candles and look for further signs for a forthcoming change in trend. Thus, a series of upward preceding candles when followed by a Doji implies a pause in the bullish ongoing trend and impending transitional pullback and vice versa.

Frequently Asked Questions

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Candlestick patterns capture the underlying emotional changes that traders are currently going through and hence, can be perceived as a bellwether of market’s next course of action. However, many factors affect candlestick pattern readings, such as:

Time intervals chosen for charts

Selection of appropriate holding period for different patterns

Using as many as possible supplemental indicators for confirmation (eg. RSI, Bollinger Bands)

Awareness of the fact that Candlestick patterns are not really price target predictors and tracking other patterns, in lieu of it

However, there is no disputing that candlestick patterns for day trading is effective in deciding market timing and early warnings.

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Candlestick patterns for day trading has been used by a plethora of traders, yielding attractive profit/loss ratios. 2 profitable pointers to what the market is experiencing can be understood from candlestick patterns for day trading, namely:

The changes in a day’s range can be easily witnessed via candlesticks. Any expansion or contraction in ranges gives an insight to future trends

Identifying resistance levels in overbought markets and supports in oversold markets is the key to understanding when to sell and take profit and when to buy at the most lucrative price. This is explicitly identified in many candlestick patterns.

Hence, early predictability of trends from candlesticks, can definitely make trading profitable.

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The total list of candlestick patterns is said to contain more than 100 different figures. Expecting that all of them would give the same outcome every time, would be optimistic. Studies have shown that differing markets show differing success rates, even among the best candlestick patterns. The intelligent trader would combine other complementary indicators such as trendlines, pivots, MACD to his list of candlestick pattern readings, to make an accurate market forecast. The Best candlestick patterns known to have a high degree of successful trades, are those with dramatic visual effect and those that tip traders not to make false moves based on a single pattern or uncertain and indecisive price changes alone.

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