The Doji are the ones of the most popular single candlesticks.
What makes them unique is the meaning they bring to the market.
When we say that their primary meaning is indecision, you won’t get it at first.
But, let us explain to you the power of this meaning.
What is the meaning of these candlesticks?
Let’s assume we are in a downtrend and after days of dropping, we see a Doji.
The downtrend, same as uptrend, is the trending type of the market where there is not too much indecision.
When you see Doji in the downtrend, it is probably not the sign you want to see if you want the price to go deeper down.
As we mentioned in our lesson about trends, the first characteristic is that downtrend is not the straight move down.
That’s why the Doji could be the sign for a short-term move against the trend.
However, it may be the sign that will spark the beginning of a reversal in the entire trend.
It shows weakness in the trend. In a downtrend, you want to see people selling.
If they are not selling, they are either thinking of selling, thinking of buying or buying.
The two out of 3 are signs of potential change in trend, and that’s the main reason why this candlestick has so powerful and significant meaning to us as the traders.
While there are a few different shapes, they all have very similar meaning, indecision.
Before going deeper, let’s show you examples of the Doji.
As you may notice, the Doji candlestick is recognized by small or no body at all and wicks above and below the miniature body.
The Doji star and long legged Doji have almost the same meaning.
The difference comes from the length of their wicks.
The Dragonfly and Gravestone Doji are the type of the Doji with a specific meaning that is not the same.
Dragonfly Doji has bullish sentiment while Gravestone Doji brings bearishness to the market in both types of trends, either uptrend or downtrend.
They can form anytime, anywhere.
However, we want to look at ones that form in certain areas.
We want to see them where indecision gives us some sign.
Indecision in trending market is a significant sign, but indecision in a sideways market is almost useless.
Whole sideways market is one big indecision, and by forming in this type of the market, we are getting one more confirmation that we are still stuck in the ranging market.
We want to look at Doji candlesticks that form in trending market, an uptrend or a downtrend.
This is a very important lesson so please go through this one multiple times because it is required to have a very good understanding of the Doji.
They will be used later on a lot in our course.
Milos is an independent trader, with a background in journalism and publishing. Nomadic by nature, he’s lived in four different countries this decade. He’s fascinated by Blockchain technologies’ potential to reshape all aspects of our lives. Milos got into Bitcoin while completing his degree and hasn’t looked back since, writing about anything crypto-related. He is the co-founder of the Cryptoaims and he has a strong passion to educate people about this revolutionary technology.