Doji Bars Signal Indecision Strategy

  • 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.

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