Welcome to the Trading Era! In this post, we will discuss the Doji candlestick pattern, as well as two specific types of Doji candlesticks: the Dragonfly Doji and the Gravestone Doji. If you’re a trader, you’ve likely heard of the Doji candlestick pattern before, and this post will provide answers to all your questions related to it. So, let’s get started!
What is Doji Candlestick Pattern?
Doji Candlestick Pattern is the most important candlestick Pattern, When Doji forms in Chart, It tells us that the Market opens and closes at the same level or price which means that there is indecision between buyers and sellers, here no one controls the market. You can see the example below:
If any Stock or Index opening price is the same as the closing price, this means that Buyers and sellers are confused and the market didn’t decide which direction will take. If Doji candlestick forms in an uptrend or downtrend, that means the market is likely to reverse. For better understanding see the example below
You can see in the above chart How the market changed our direction after the formation of the Doji candlestick.
If the market in an uptrend, that means that buyers were in control of the market.
The formation of the Doji indicates that buyers are losing their strength to keep prices higher, and sellers push prices back to the opening price. That means It’s a clear indication that a trend reversal is likely to happen.
Always remember, Doji indicates indecision in the market, If the Doji forms in the middle of the trend that means no sense to reverse the market.
On Other hand, If a Doji forms at the bottom or at the top of a trend, it is considered as a sign of reversal of the Trend of the Market.
You can trade the Doji pattern with another technical analysis tool. It’s a very profitable pattern because the market reverse is a very fast move.
Types of Doji Candlestick Pattern
There are two types of Doji Candlestick Pattern:
- The Dragonfly Doji Candlestick Pattern
- The Gravestone Doji Candlestick Pattern
#1 The Dragonfly Doji Candlestick Pattern
The Dragonfly Doji is the bullish candlestick When Dragonfly Doji forms in Chart, It tells us that the Market opens and closes at the same level or price but near the high of the market, which means that buyers are stronger than sellers, When the Market Open sellers are pushing down the price and then Buyers are active and push up the Price and close near high. here Buyers have control of the market. You can see the example below:
The Dragonfly Doji Pattern is the long lower tail that shows the resistance of buyers and their push the market up.
See the example below:
The example above shows us a perfect dragonfly Doji Candlestick. The long lower tail suggests that there is a high buying pressure in the area.
When a dragonfly Doji forms at the bottom or downtrend of a trend, it is considered as a sign of reversal of the Trend of the Market.
The Gravestone Doji Candlestick Pattern
The Gravestone Doji is the bearish candlestick When Gravestone Doji forms in Chart, It tells us that the Market opens and closes at the same level or price but near the low of the candle, which means that sellers are stronger than buyers, When Market Open buyers are pushing up the price and then Sellers are active and push down the Price and close near low. here Sellers have control of the market. You can see the example below:
The Gravestone Doji Pattern is the long upper tail that shows the support of sellers and their push down the market down.
See the example below:
The example above shows us a perfect Gravestone Doji Candlestick. The long upper tail suggests that there is high selling pressure in the area.
When Gravestone Doji forms at the Top or Uptrend of a trend, it is considered as a sign of reversal of the Trend of the Market.
Always remember, you can’t trade the Doji pattern alone, you will need other confirmation to determine high probability Trade.
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Happy Trading……
