A Doji candle is a type of candlestick pattern used in technical analysis to help identify securities price patterns. It is a candlestick pattern that signals indecision between buyers and sellers in the market. A Doji candlestick is confirmed on a technical analysis chart when the opening and closing prices are almost identical. The word "Doji" comes from the Japanese phrase "dōji," which means "same time" or "simultaneous".
A Doji candlestick can look like a cross, inverted cross, or plus sign. It can represent a trend reversal indication for analysts, although it can also signal indecision about future prices. The Doji candlestick has five variations, and not all of them indicate indecision. Generally, the Doji represents indecision in the market but can also represent a temporary equilibrium.
Doji candlesticks can reveal information about market trends, sentiment, momentum, and volatility. Technical traders interpret a Doji candle as an indication of a trend reversal, so they choose to pause and reflect for more convincing patterns to emerge. Traders keep a lookout for Doji candlestick patterns to appear in the trading chart to predict when market trends might switch.
