Doji

A Doji candlestick is a type of candlestick that has a small body and long upper and lower shadows. It is considered to be a neutral candlestick, as it does not indicate a clear trend. Doji candlesticks can occur at any point in a trend, but they are most common at the end of a trend.

There are two main types of Doji candlesticks: the dragonfly Doji and the gravestone Doji. The dragonfly Doji has a small body and long upper and lower shadows that are about the same length. The gravestone Doji has a small body and long upper and lower shadows that are not the same length. The upper shadow of a gravestone Doji is usually longer than the lower shadow.

Doji candlesticks can be interpreted in a number of ways. Some traders believe that Doji candlesticks indicate a potential change in trend. Others believe that Doji candlesticks simply indicate indecision in the market. The best way to interpret a Doji candlestick is to look at it in the context of the surrounding candles.

Doji candlesticks can be used to trade in a number of ways. One common strategy is to wait for a Doji candlestick to form at the end of a trend. If the Doji candlestick is followed by a candle that breaks the trend, this can be interpreted as a signal to enter the market in the direction of the break.

Another strategy is to trade on the break of a Doji candlestick. If the Doji candlestick is followed by a strong candle in the same direction as the Doji's body, this can be interpreted as a signal to enter the market in the direction of the break.

Doji candlesticks can be a useful tool for technical analysis. However, it is important to remember that Doji candlesticks are only one piece of the puzzle. It is important to look at Doji candlesticks in the context of the surrounding candles and other technical indicators in order to make an informed trading decision.