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Lesson 13

  1. Doji

Shades of Doji

Doji candlesticks come in a variety of shapes and sizes. Doji candlesticks have a very short body or have nearly the same open and closing price.

A Doji has a small body with a thin line indicating it.

Doji candlesticks are a sign that the market is undecided. The Bulls and the Bears are locked in a stare-down. Prices will typically move above or below the opening price but close at or near the opening level. Neither the Bulls nor the Bears were able to score, resulting in a tie.

There are four Doji candlesticks that are unique.

The upper and lower shadows’ lengths can differ, creating a candlestick that resembles a cross, reversed cross, or (+) symbol.

The singular and plural forms of the word Doji are both used.

When you see a Doji on your chart, pay close attention to the historical or previous candlesticks.

One of the most important candlestick patterns to recognize is the Doji. It’s a sure sign of a shattered trend. The goal is to establish a market status quo.

When a Doji appears after a long uptrend, it serves as a warning to traders that the Trend is nearing or has already peaked. However, it happened after a long period of decline. It means that prices have been compelled to remain low.

This could be due to a variety of factors (Fundamentally probable).

Long-Legged Doji: The upper and lower shadows of this Doji candlestick pattern are nearly the same length. It’s crucial to compare the Candle to the center point. Weakness is indicated by a closing point that is lower than the center point.

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The market moves above and below the opening price level, as shown by a long-legged Doji. The final result, or closing result, does not differ significantly from the initial level.

Dragonfly Doji: This Doji pattern appears when the open, high, and close are all about the same, and the low casts the long, lower shadow.

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The Doji of Dragonfly indicates that sellers attempted to drive the price lower during the session, but buyers were able to push the price back up to the opening level. With a long, low shadow and now shadow above the opening level, it resembles the letter (T). It is critical to comprehend the Dragonfly Doji pattern.

Gravestone Doji: The Gravestone Doji is the polar opposite of the Dragonfly Doji. It appears to be a mirror image (T). When the open, low, and close are all the same, the Gravestone Doji is formed. The upper shadow is caused by the high. The bulls attempted to score points throughout the day, but the bears rallied late in the game to force a 5-5 tie.

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Four Prices Doji: Doji with four prices. When the length of the Candle’s body is equal or relatively short, and there are no shadows, or up or down movement, the Candle is classified as a Doji (when there are shadows they are really short).

It’s unusual to find a Four Price Doji. It does, however, demonstrate that neither the Bulls nor the Bears know how to win this game. The market is entirely insecure and unsure of where it should go. A specific Doji could indicate a trend reversal. It’s most likely that you’ll see them in the shorter time frames.

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  1. The Spinning Top

Candlesticks with a long upper shadow and a long lower shadow are known as Spinning Tops. They have real bodies as well. The color of the body is irrelevant because it reveals the market’s indecisiveness. All we need to know about these candlesticks is that.

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From open to close, the real bodies (green or red) show minimal movement. The Bulls and Bears have been fighting in the shadows, but neither of them has been able to gain the upper hand.

The session was closed with relatively small margins, and the price clearly moved up and down during the match.

When a Spinning top or a series of Spinning tops appears during an uptrend, it may indicate that there aren’t many buyers left and that a reversal is possible. A Spinning top, or a series of them in a downtrend, is the same. So, be aware of the next move whenever a Spinning top appears.