Doji

Doji is a neutral candlestick pattern that signals market indecision. Neither buyers nor sellers have established control, and the next candle’s direction determines which side wins.

What This Pattern Tells You

This pattern signals that the market cannot decide which direction to take. The balance between buyers and sellers is even, and a resolution is pending. Traders should wait for the next candle to break clearly in one direction before acting.

How to Trade It

Entry: Wait for the next candle to confirm direction before entering.

Stop loss: Place your stop loss above the highest point of the pattern.

Target: Aim for a measured move equal to the height of the pattern, or target the next significant support or resistance level.

Confirmation: Do not act on the pattern alone. Require at least one confirming signal such as a follow-through candle, a volume spike, or a supporting oscillator reading before entering.

When Is It Most Reliable

Look for this pattern at significant price levels such as key support, resistance, or round numbers. The signal gains credibility when accompanied by narrowing volatility or a notable shift in volume. Always wait for the following candle to confirm the direction before acting.

How to Identify It

Look for the following characteristics when identifying Doji on a chart:

• Open and close virtually identical.
• Can have upper and lower wicks.
• Context-dependent (trend matters).
• Signals potential reversal.

Reliability

With an 70% historical success rate, Doji sits in the solid reliability tier among candlestick patterns. No technical signal is infallible. Always define your maximum acceptable loss before entering a trade, and honour your stop loss without exception.