Doji Candle is one of the most important types of Japanese candles used in technical analysis of financial markets. The Doji candle is characterized by a very small or non-existent body, which means that the opening and closing prices are very close or identical.
✴ Characteristics of the Doji Candle:
Very small or non-existent body: Represents the equality of supply and demand forces during the session.
Variable upper and lower shadows: The candle may have long or short shadows, reflecting price fluctuations.
Indicates confusion in the market: Reflects uncertainty between buyers and sellers.
✴ Types of Doji Candles:
1️⃣ Standard Doji: The opening and closing prices are almost equal with short shadows.
2️⃣ Long-Legged Doji: It is characterized by long upper and lower shadows, indicating high price fluctuations before the price returns to close at the opening point.
3️⃣ Dragonfly Doji: It has a very long lower shadow, with no upper shadow or a very short shadow, indicating a potential bullish retracement.
4️⃣ Gravestone Doji: It has a very long upper shadow with no lower shadow or a very short lower shadow, indicating a potential bearish reversal.
5️⃣ Four-Price Doji: It appears as a horizontal line only, meaning that the open, close, high, and low prices were exactly the same, which is very rare.