- A Doji is formed when the opening and closing prices are almost the same.
- There are several variants of Doji based on which way the price moved first then reversed.
- If the high and low are situated at equal distance from the open and closing prices, it is called a Star Doji.
- If the price goes up and down but returns to close at the opening price, it will be considered as Gravestone and Dragonfly Doji, respectively.
- These two patterns look like the letter T and an inverse letter T and considered bullish and bearish signals.
- When you see a Doji formation, it screams indecision in the market. But you should also consider the location of the Doji bar. If a Doji forms during a strong trend, it can signal trend continuation if the price breaks above the Doji.
- In figure, a Doji formed during an uptrend and signaled temporary equilibrium in the market. However, as soon as the asset’s price broke above the high of the Doji, the uptrend continued.
Add comment