Lesson 2 of 8 · Candles & Chart Patterns
Doji
A doji means nobody won.
A doji has almost no body. Open and close finish at nearly the same price. Buyers and sellers fought to a draw for the full period. On its own, it signals that the current move may be losing steam.
The candle that shows a draw.
The DOJI label marks the candle with the tiny body. Note the wicks: price moved above and below the open, then finished almost where it started. Neither side dominated the session.
Context is everything.
A doji after a long trend hints at exhaustion. After a sharp drop, it can signal a potential reversal. In the middle of slow sideways action, it means almost nothing. Always ask where the doji appears in the larger structure before acting on it.
A doji forms at the top of a strong 10-day rally. What does it most likely signal?
Show the answer
C. Uncertainty and possible reversal. A doji after a strong move is a pause signal. It doesn't guarantee reversal, but it says buyers have lost their edge for that period.