Doji
A single candle whose open and close are almost the same, leaving a very small body. Price moved during the candle but returned to where it started by the close. It can show indecision: neither buyers nor sellers won over that period.
How it forms
- The open and close are almost the same. The candle's colour does not matter.
- The body is at most 10% of the candle's full range (from high to low).
- Long-legged doji: both wicks are long and the body sits near the middle of the range.
- Dragonfly doji: the body is at the very top of the range, the upper wick is negligible and the lower wick is long.
- Gravestone doji: the body is at the very bottom of the range, the lower wick is negligible and the upper wick is long.
Dragonfly and gravestone dojis look like pin bars because of their single long wick. When the body is this small, the name doji is used.
What it suggests
On its own, a doji gives no direction. What it shows is that neither side managed to close price in its favour over that period. The longer the wicks, the wider the range the tug of war covered.
Its meaning depends largely on where it forms. A doji after a strong move may suggest that the move is losing pace. In a market that is already moving sideways, dojis are common and usually add nothing new. In patterns such as the morning and evening star, the middle candle is often a doji.
When it strengthens, when it weakens
Strengthens
- Forming at a support or resistance zone
- A clear, fast move before it
- The wicks sticking out beyond the previous candles' range
- Above-average volume
- Forming on a higher timeframe (4H, 1D)
Weakens
- Forming in the middle of a flat, directionless market
- Many dojis or small candles in a row
- Very short wicks (the whole candle is small)
- Low volume
- Forming on very low timeframes (1m, 5m)
The MarketLevelMap view
How it relates to zones
A doji at a zone shows that price has reached a level where it reacted before, and has paused there. The prior move carried price to the zone, but neither side took control at it. This can be a hint that the zone still matters.
How this indecision resolves is a separate piece of information. Where the next candles close relative to the doji's range, and to the zone, shows whether the zone held. The doji raises the question; it does not answer it.
A doji between two zones, away from any level where price might react, is usually an ordinary pause.
When it is invalidated
A doji has no direction, so it has no scenario to invalidate. The indecision read stops being relevant once price closes beyond the doji's high or low. The direction of that close belongs to the price action that follows, not to the doji.
If price stays inside the doji's range for several candles, the single candle's indecision turns into a wider sideways move. At that point it is hard to give the doji a meaning of its own.
Often confused with
- Spinning TopThe body is small but visible; a doji has almost no body.
- Pin BarOne long wick and a small body, which can be larger than a doji's.
- HammerLooks like a dragonfly doji but has a clear body and is read after a decline.
For general information only. Not investment advice.Last updated: