Definition of Doji Candle

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Doji formation is a candlestick pattern whose open and close prices are the same or almost the same. Its formation signals the condition of consolidation.

Doji formation is one of the most obvious trading signals in candlestick patterns. Since hundreds of years ago the candlestick was used for trading rice commodities in Japan, until now this formation is still considered a valid trading signal. Doji is a candlestick pattern whose open and close prices are the same or almost the same, so that this candle may not have a very small body or body.



Doji formations include candlestick patterns that consist of only one candle. Doji are formed when the market is consolidating or hesitating about the direction of the next price movement. It is clear here that the bullish and bearish sentiments are in a balanced state. Between buyers and sellers waiting for the next price movement.

Doji formations usually form at least a few bars after prices move up or down. At that time, there was uncertainty among market participants about where the next price movement would be taken.

Once again keep in mind that the doji is a signal of consolidation, and has not indicated any movement. Although there are several types of doji that are considered as an indication of a change in a certain direction, their validity is low to medium. So, you should not use the doji as the sole entry reference.