Doji Candles: How to Interpret Them and Trade using This Pattern

That is why you must understand the differences and interpret the differences of these formations to minimize risks and earn a consistent profit. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy. Doji and spinning tops show that buying and selling pressures are, essentially, equal, but there are differences between the two andhow technical analysts read them. Charles has taught at a number of institutions including Goldman Sachs, Morgan Stanley, Societe Generale, and many more.

Any type of doji qualifies as a northern doji provided it appears in an upward price trend like the one shown here. A doji candlestick has the opening and closing prices within a few pennies of each other. In this case, a long lower shadow would suggest the bulls battled back the bears for possession of the price trend.

Is the Doji bullish or bearish?

Dragonfly Doji indicates that sellers dominated trading and drove prices lower during the session. By the Doji Candlestick Pattern end of the session, buyers resurfaced and pushed prices back to the opening level and the session high.

The Gravestone Doji is the opposite of the Dragonfly Doji. It appears when price action opens and closes at the bottom of a trading range.

What does a Doji candle mean?

However, it’s important to consider this candle formation together with a technical indicator or your specific exit strategy. Traders should only exit such trades if they’re confident that the indicator or exit strategy confirms what Doji is suggesting. It can mean https://www.bigshotrading.info/ that a more significant move is about to happen. This is because the momentum has stopped completely, and when a new shift in buying or selling pressure occurs, it can cause a run in that direction. A series of Dojis and neutral candles on the PrimeXBT platform.