Different Types Of Doji Candlestick Pattern
Candlestick patterns are a common way to predict trends and formulate a trading strategy. When viewed with a variety of data, there are many candlestick patterns that can indicate the direction of the market.
The doji pattern is one such candlestick formation. A doji pattern is one that appears in trading sessions where the closing and opening prices of an asset are nearly equal. These patterns are often seen as parts of larger patterns, and they rarely occur in normal trading conditions. Due to the rarity of cases where the close and open prices are nearly identical, the Japanese word doji literally means'mistake' or a 'blunder'. A doji pattern could indicate indecisiveness on the market, where buyers and sellers cannot gain an upper hand.
There are many types of doji candlesticks. They look almost identical to a cross or plus sign, and they have relatively small shadows. There are many types of doji patterns that can occur during consolidation periods. These may be before price reversals, continuation trends or other market conditions.
Types Of Doji Patterns:
Recognizing this pattern will give you information depending on its context and the types of doji candles used. There are five types of doji candlessticks that can be used to indicate market trends and market conditions.
- Doji Star: Standard Doji Candlesticks might not indicate market trends when they are viewed alone. It can indicate a shift in market direction if it is viewed within the context of prevailing trend. A bullish candlestick may precede a doji formation, which may signify an uptrend. Conversely, a bearish candlestick below the pattern's lowest (with a higher high than the doji) could signal a sell signal. These types of doji could also be followed by a downtrend, which could be followed by a bullish candlestick to a buy scenario.
- Gravestone doji: These doji candles have long shadows with negligible lower wicks. This may be a sign that buyers were successful in increasing prices initially but failed to maintain this trend at the end. It could signal a bearish trend reversal if it happens during an uptrend, particularly at the Fibonacci resistance level. It could also indicate a bullish trend reversal if it happens at the support level and it is in an uptrend.
- Dragonfly Doji: Dragonfly dooji are an alternative to gravestone doji, with their long lower shadows and finer wicks. These may be seen at the top or bottom, respectively, of uptrends and downtrends. This could indicate a shift in market direction. A tiny upper shadow means that the price didn't rise above the open during the session. They often act as a bullish signal when they form at the bottom a bearish trend.
- Four Price Doji This type doji has a single straightline with no extensions and prices didn't move in either direction during the session. This could indicate a calm market or high levels of indecision.
- Long-Legged Doji: These types of doji candlesticks have greater extensions on each side of the chart's bodies. This indicates that there was intense competition between sellers and buyers throughout the session. The formation of a long-legged doji was possible because neither of these groups could dominate the market. When analyzing these types doji candles, the focus should be on the position of closing prices relative to the midpoint. If the close is higher than the midpoint it could be a bullish pinbar and signal an uptrend, if it happens close to the support levels. If it forms at resistance levels, the reverse scenario could signal a bearish pi bar.
When spotted at the bottom of downtrends or uptrends, different types of doji can be useful indicators of trend reversal. They may not be as powerful a sign when they are occurring at the beginning of a trend. They may be a sign of indecision. You should also remember that if a previous trend persists after a Doji, it may act as a fake reverse pattern that could encourage you to keep an existing trade. When using doji patterns for trades, it is important to take into account the market conditions and other parameters.