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Doji: A dodgy candlestick

A candlestick chart is also known as the Japanese Candlestick chart. It is used to deliver 4 important information which is opening price, highest price, lowest price and the closing price. It is flexible and can be customised into minutes, hourly chart, daily chart, weekly chart or monthly base on traders preference.

Here’s a little guide on how you can look at candlesticks.

structure of candlesticks

But today, we will be looking at the Doji candlestick. Let’s step right into it!

When a doji candlestick appears alone it signifies uncertainty. It means that the market is still unsure of what is about to happen next. However what’s important is what appears next after a doji.

Below we can see an example of the movement when a bearish candle appears after the Doji candle.

Doji Bearish-01
As you can see the price starts do dip after the bearish candle appears after a doji.

Whereas in the situation where a bullish candlestick appears after the Doji, we can see below that the price has risen.

Doji Bullish-01.jpg

But let’s not forget another type of doji candlestick, the Dragonfly Doji. 

Dragonfly Doji-01.jpg

This occurrence is when the opening price, closing price and highest price meets. Basically, it is telling us, after a strong sell down it still managed to close at the highest price. Let’s look at the chart below.


Dragonfly Doj chart-01.jpg
Here we can see a bullish pattern after the appearance of a dragonfly doji

Basically, a candlestick by itself is able to let us understand the psychology behind the price and to predict the next movement. When paired with other indicators and the study of price & volume, it is indeed a formidable indicator.

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An article by: Stevent Hee

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