Doji
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The doji is a commonly found pattern in a candlestick chart of financially traded assets (stocks, bonds, futures, etc). It is characterized by being small in length -- meaning a small trading range -- with an opening and closing price that are equal. The image below illustrates.
[edit] Interpretation
The doji represents indecision in the market. A doji is not as significant if the market is not clearly trending, as non-trending markets are inherently indicative of indecision. If the doji forms in an uptrend or downtrend, this is normally seen as significant, as it is a signal that the buyers are losing conviction when formed in an uptrend and a signal that sellers are losing conviction if seen in a downtrend. Most traders will place greater significance on the doji when it forms in a market that is in overbought or oversold territory as noted by oscillators like relative strength index or MACD.
[edit] See also
- Technical Analysis
- Chart pattern
- spinning top (chart pattern)
- Market analysis
- Trader (finance)
- Candlestick chart
- pattern recognition
