InvestorQ : What exactly is a DOJI and how are DOJIs used in practice while trading and charting?
Abhisha Yadav made post

What exactly is a DOJI and how are DOJIs used in practice while trading and charting?

Answer
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Bhavika Nehru answered.
1 year ago


DOJIs are one of the most popular candlestick patterns. Typically, these Candlestick patterns are formed either by a single candlestick or by a succession of two or three candlesticks. Either ways, a clear pattern has to emerge via candlesticks. DOJIs are useful in tracing the points of break out and also the point of consolidation. Let us look at DOJIs in detail!

DOJI candlesticks, for example, indicate indecision in a market that may be a signal for an impending trend change or market reversal. DOJIs are also called confusion patterns or where the markets are essentially ambivalent about the direction. That is why DOJIs are considered to be important indicators of sharp turnarounds in trend. That is when a positive trend in a stock or an index gives way to a negative trend or when a negative trend in the stock or index gives way to a positive trend. It works both ways with DOJIs .The singular characteristic of a DOJI candlestick is that the opening and closing prices are the same, so that the candlestick body is a flat line. The longer the upper and/or lower “shadows”, or “tails”, on a DOJI candlestick – the part of the candlestick that indicates the low-to-high range for the time period – the stronger the indication of market indecision and potential reversal. The most important aspect of a DOJI is that it basically captures that interim period when the trader is able to identify the shift in the trend and based on their trade perspective they can take positions before the rest of the market gets into the specific position.