What Is a Doji?
A doji is a candlestick pattern where the opening and closing prices are nearly identical, resulting in a very small or nonexistent body. The wicks extend above and below, creating a cross, plus sign, or inverted cross shape depending on the variant.
How the Doji Works
The doji signals equilibrium between buyers and sellers. Neither side managed to move price significantly from where it opened. Key variants include:
- Standard Doji — Equal wicks, tiny body (complete indecision)
- Dragonfly Doji — Long lower wick, no upper wick (bullish reversal signal)
- Gravestone Doji — Long upper wick, no lower wick (bearish reversal signal)
- Long-Legged Doji — Very long wicks on both sides (extreme indecision)
Why It Matters for Traders
Dojis are most significant at key support/resistance levels or after extended trends. A doji at the top of an uptrend suggests momentum exhaustion and potential reversal. The pattern itself is neutral — its meaning comes from context and the candles that follow it.
