Doji

A doji is a candle whose open and close are almost equal, so it has almost no body. It shows indecision: neither buyers nor sellers won the period.

How it works

A doji looks like a cross or plus sign: a thin line instead of a body, with wicks up and down. Price moved both ways during the period but closed where it opened. It does not need to be exact; the body is just tiny compared with the candle's range.

There are a few types. A long-legged doji has long wicks both ways, showing a hard fight. A dragonfly doji has a long lower wick with open and close near the high. A gravestone doji has a long upper wick with open and close near the low.

After a strong trend, a doji at a key level can mean the move is running out of steam. It is not a reversal signal by itself: you need the next candle to confirm the direction.

Example with numbers

ETH rallied for three days from $2,800 to $3,300 into resistance. The daily candle opened at $3,300, traded up to $3,380 and down to $3,220, and closed at $3,302. A $2 body on a $160 range is a doji. A next close below $3,220 would confirm buyers are fading.

Common mistake

The mistake is jumping into a counter-trend trade on the first doji you see. In a strong trend a doji is often just a pause before the move continues. Wait for the next candle to confirm and only trade a doji at a meaningful level.

Questions and answers

What is a doji in simple terms?

It is a candle with almost no body because price closed where it opened. It means the market has not decided where to go yet.

Is a doji bullish or bearish?

Neither on its own. Context decides: after a rally into resistance it hints that buyers are tiring, after a drop into support it hints that sellers are.

What are dragonfly and gravestone doji?

A dragonfly has a long lower wick and closes near the high; it often shows up at bottoms. A gravestone has a long upper wick and closes near the low; it often shows up at tops.

Doji

How it works

Questions and answers

Related terms

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