Doji Candlestick Pattern: When the Market Can't Make Up Its Mind

Most candles tell you who won a trading session. The doji tells you something more interesting: nobody won.

Buyers and sellers battled through the entire session — up, down, sideways — and ended up exactly where they started. The open and close are at or near the same price. The result is a cross shape instead of a rectangular body.

That standoff matters because it rarely lasts. A doji in the right context is often the pause before the next significant move.

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What Is a Doji?

A doji forms when the opening and closing price of a session are identical or nearly identical — creating a candle with no discernible body (or a very tiny body). Shadows (wicks) can extend above, below, or both ways depending on the session's price action.

Types of doji (all detected separately in GeckoScreener):

Standard doji formation rules:

• Body: Near-zero (open ≈ close, within 0–5% of the candle's total range)
• Shadows: Present on one or both sides
• Color: Irrelevant (body is too small to matter)

Strength rating: 50/100 — context-dependent.

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The Psychology Behind the Doji

During the session, neither bulls nor bears could establish control. Price may have traveled significantly — up and down — but ended where it started. This represents a genuine balance of power.

In trending markets, this is unusual. When a trend has been in place, sessions where no side wins are notable. They often signal that the prevailing force (bulls in an uptrend, bears in a downtrend) is losing momentum.

In sideways markets, dojis are normal and carry little predictive value.

The key question with every doji: Who was in control before this candle? The answer determines whether the doji signals exhaustion or just normal volatility.

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What the Doji Means Based on Position

At the Top of an Uptrend — Bearish Caution

An uptrend requires bulls to maintain consistent buying pressure session after session. A doji in an uptrend says the bulls stalled — they couldn't close higher. If the next candle is bearish, this becomes a reversal setup.

The more sessions the uptrend has been running, and the longer/sharper the rally has been, the more significant the doji at the top. It's a yellow flag — not a confirmed short, but a reason to tighten stops or reduce exposure.

At the Bottom of a Downtrend — Bullish Caution

After a sustained decline, a doji shows that sellers have stopped dominating. Bears drove price down hard at some point during the session, but buyers absorbed it and price closed where it opened. Selling pressure may be exhausting.

This is the setup most associated with trend reversals. But wait for confirmation — one more bearish candle after a doji at the lows invalidates the reversal thesis.

Near Key Support or Resistance

A doji that forms exactly at a well-known support level carries higher significance than one in open space. The market arrived at a previously respected level and, for the first time, couldn't continue past it. That's meaningful.

Same logic applies to dojis at resistance — price rallied to a level, couldn't close above it, and the session ended at exactly where it started. The resistance level is holding.

In Consolidation

Dojis form frequently in ranging markets. They have very low predictive value here — indecision is the expected state in a sideways market. Only pay attention to dojis in consolidation if they appear as the final candle before a major breakout.

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Dragonfly Doji vs. Gravestone Doji

While the standard doji is truly neutral, its variants lean directional:

Dragonfly Doji — Long lower wick, no upper shadow. Looks like a "T." At the bottom of a downtrend, this is bullish — sellers pushed price down hard but buyers rejected the lows entirely and closed at the high. It shares characteristics with the hammer.

Gravestone Doji — Long upper wick, no lower shadow. Looks like an inverted "T." At the top of an uptrend, this is bearish — buyers pushed price up hard but sellers rejected the highs entirely and closed at the low. It shares characteristics with the shooting star.

GeckoScreener detects all three variants separately, allowing you to screen specifically for the more directional versions.

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How to Trade the Doji

The doji itself is not an entry signal — the confirmation candle is.

Bullish play (doji at bottom of downtrend):

• Wait for the next candle to close above the doji's high
• Enter on confirmation candle close or next candle open
• Stop below the doji's low
• Target: previous resistance, nearest moving average above

Bearish play (doji at top of uptrend):

• Wait for the next candle to close below the doji's low
• Enter on confirmation candle close or next candle open
• Stop above the doji's high
• Target: previous support, nearest moving average below

Volume: A doji on high volume (especially at key levels) means the indecision happened with significant participation — more meaningful than a quiet doji.

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