Doji indicates the difference between the open price and the closed price. Doji is also known as a sign of uncertainty.
If the volume dries up or the volume is low, the Doji can give a stronger signal at that time.
Types of Doji :
- Gravestone Doji.
- Dragon Fly Doji.
- Long Legged Doji.
01. Gravestone Doji :
This is a candle indicating downward momentum. Shows the futility of the rally’s efforts during that day.
The gravestone dozy candle appears in the chart above. This meant that an attempt was made to hold an intraday rally but to no avail.
If the price opens down the next day, you get a confirmation for sell.
02. Dragon Fly Doji :
The Doji Candle is a strong bullish candle that signals the end of the downtrend and the beginning of the upward momentum.
On this chart, we can see the design of Dragon Fly Doji.
This candle is formed because the trading price of that day falls intraday but recovers and closes back to the open price or level.
This candle resembles a hammer. But the difference is that the price closes at or near the open price of the day.
The signals found in the DragonFly are considered stronger than the hammer candles. The next day the price gap opens and you get a buy signal.
03. Long Legged Doji :
Long-legged Doji has long shadows on both sides, mostly parallel in size.
This type of candle shows a lot of uncertainty in the market and indicates that the trend will change over time.
This pattern indicates the established uncertainty between bullish and bearish players. We can see that in the next few days prices will be stuck in a limited range.
Whether it is bullish or not, the decision should be made by examining the possibility of a recession along with other indicators and looking at what the medium to long term trend is showing.
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