Introduction
Not all Doji candlesticks are the same. While they all represent market indecision, the shape and position of a Doji can provide more detailed insights into possible price action. This guide will help you recognize and interpret the different types of Doji candles.
1. Standard Doji
- Appearance: Open and close are nearly identical with short upper and lower wicks.
- Meaning: Pure indecision, often seen in the middle of a trend or during consolidation.
- Use: Wait for the next candle to confirm direction.
2. Gravestone Doji
- Appearance: Long upper wick, little to no lower wick, open and close at the bottom.
- Meaning: Bullish attempts failed, bearish pressure may follow.
- Use: Potential reversal after an uptrend, especially near resistance.
3. Dragonfly Doji
- Appearance: Long lower wick, little to no upper wick, open and close at the top.
- Meaning: Sellers pushed price down, but buyers regained control.
- Use: Indicates bullish reversal after a downtrend, especially at support.
4. Long-Legged Doji
- Appearance: Long upper and lower wicks, open and close nearly equal.
- Meaning: Extreme market volatility, high indecision.
- Use: Be cautious, wait for strong confirmation before acting.
Tips for Identifying Doji Candles
- Focus on the size of the wicks and where the open/close occur.
- Always consider market context—support, resistance, trend strength.
- Combine with volume and other indicators for stronger signals.
Conclusion
Identifying the type of Doji candlestick helps traders better understand market sentiment. Whether it’s a Gravestone, Dragonfly, or Long-Legged Doji, knowing what each one suggests allows for smarter, more informed trading.
