doji

Dojis have no bodies- just a horizontal line signifying the same opening and closing price. Pure Dojis are pretty rare, but if the body is very short, they are often called dojis anyway (or fat dojis).

There are various forms of doji candlesticks. A Long-Legged Doji has long shadows, meaning there was quite a bit of price movement higher and lower within the time period. Basically, what happens is the market moves one way and then falters, and retracts back. Doji are a sign of indecision. The dodderers are calling the shots in the market.

A Dragonfly Doji has only one shadow, below the body. This indicates a trend reversal from bearish to bullish: place your bets with the bulls if you see these.

A Gravestone Doji is the other way around. There´s only one shadow again, but with a Gravestone Doji it´s above the teeny tiny body. So this is a sign of a bullish trend reversing into a bearish. Put your chips in with the Bears and head south.

A 4-Price Doji is a rare beasty indeed. This signifies that the open, close, high and low price were the same. It normally means that either there was no one trading (low liquidity- possible with some minor pairs), or trading was suspended.

Our Top Tip

Note: Watch out for Doji’s that appear after an extended period of long bodied candles, (either bullish or bearish). You can never predict anything 100% in forex, but this should give you more confidence that the market is going to behave according to the theory.