Doji

A doji is a single candlestick pattern in Japanese candlestick charting where the opening and closing prices are essentially identical (or very close), resulting in a candle with little or no real body. The doji represents a period of indecision where neither buyers nor sellers gained the upper hand by the session's close. The appearance of a doji after an extended trend — whether up or down — often signals that the prevailing momentum is fading and a potential reversal may be near. There are several doji variations: the Standard Doji has a small body with roughly equal upper and lower shadows; the Long-Legged Doji has very long upper and lower shadows, indicating extreme indecision with wide intraday swings; the Dragonfly Doji has a long lower shadow with the open and close at or near the high, suggesting buying pressure overcame selling (bullish when appearing after a downtrend); the Gravestone Doji has a long upper shadow with the open and close at or near the low, suggesting selling pressure overcame buying (bearish when appearing after an uptrend); and the Four-Price Doji has open, high, low, and close all at the same level (extremely rare, indicating no trading activity). Doji patterns gain significance based on their context — a doji after a strong uptrend is more meaningful than one during sideways action. Traders typically seek confirmation from the next candle before acting on a doji signal.