Doji
Doji is a Japanese term used in technical analysis to describe a particular type of candlestick pattern. It is characterized by an open and close price that are equal or nearly equal, creating a cross or plus sign. Doji patterns are considered to be important signals in the stock market, as they can indicate a potential reversal in the current trend. Doji patterns can also be used to identify support and resistance levels, as well as potential entry and exit points for trades.
History of Doji
The term “Doji” was first used in the 17th century by Japanese rice traders. It was used to describe a particular type of candlestick pattern that was seen in the rice markets. The pattern was seen as a sign of indecision in the market, as the open and close prices were equal or nearly equal. Over time, the term “Doji” has been adopted by technical analysts and is now used to describe a particular type of candlestick pattern in the stock market.
Doji Patterns
Doji patterns are considered to be important signals in the stock market, as they can indicate a potential reversal in the current trend. Doji patterns can also be used to identify support and resistance levels, as well as potential entry and exit points for trades. Doji patterns can be classified into four main types: long-legged doji, dragonfly doji, gravestone doji, and four-price doji.
Long-Legged Doji
The long-legged doji is characterized by a long upper and lower shadow, with the open and close prices being equal or nearly equal. This type of doji is seen as a sign of indecision in the market, as neither the bulls nor the bears are able to gain control. This type of doji can indicate a potential reversal in the current trend.
Dragonfly Doji
The dragonfly doji is characterized by a long lower shadow and no upper shadow, with the open and close prices being equal or nearly equal. This type of doji is seen as a sign of bullish sentiment in the market, as the bulls are able to push the price up from the open to the close. This type of doji can indicate a potential reversal in the current trend.
Gravestone Doji
The gravestone doji is characterized by a long upper shadow and no lower shadow, with the open and close prices being equal or nearly equal. This type of doji is seen as a sign of bearish sentiment in the market, as the bears are able to push the price down from the open to the close. This type of doji can indicate a potential reversal in the current trend.
Four-Price Doji
The four-price doji is characterized by no upper or lower shadow, with the open and close prices being equal or nearly equal. This type of doji is seen as a sign of balance in the market, as neither the bulls nor the bears are able to gain control. This type of doji can indicate a potential reversal in the current trend.
Table of Comparisons
| Doji Pattern | Upper Shadow | Lower Shadow |
|---|---|---|
| Long-Legged Doji | Long | Long |
| Dragonfly Doji | None | Long |
| Gravestone Doji | Long | None |
| Four-Price Doji | None | None |
Summary
Doji is a Japanese term used in technical analysis to describe a particular type of candlestick pattern. It is characterized by an open and close price that are equal or nearly equal, creating a cross or plus sign. Doji patterns are considered to be important signals in the stock market, as they can indicate a potential reversal in the current trend. Doji patterns can also be used to identify support and resistance levels, as well as potential entry and exit points for trades. For more information about Doji, you can visit Investopedia, TradingView, and StockCharts.
See Also
- Candlestick Patterns
- Support and Resistance Levels
- Technical Analysis
- Trend Reversal
- Price Action
- Chart Patterns
- Price Action Trading
- Price Charts
- Price Movement
- Trend Lines
