Doji are important candlesticks that provide information on their own and as components of in a number of important patterns. Doji form when a security’s open and close are virtually equal. The length of the upper and lower shadows can vary and the resulting candlestick looks like a cross, inverted cross or plus sign. Alone, doji are neutral patterns. Any bullish or bearish bias is based on preceding price action and future confirmation. The word “Doji” refers to both the singular and plural form.
After a decline, or long red candlestick, a doji signals that selling pressure is starting to diminish and vice versa when coming after a long green candlestick. Used in conjunction with your favourite technical indicators, Doji can be a very helpful appendage when selecting our entry points.