Independent Forex Trading

Doji

The doji candlestick pattern represents a small trading range and is characterized by having a small body with an opening and close price that are virtually equal.

doji

Doji Candlestick Analysis

The doji represents and indecisive market and is most significant during a trend. When a doji appears at the top of a trend it provides a signal that the market may be reversing to the downside. Conversely, when a doji appears at the bottom of a trend it provides a signal that the market may be reversing to the upside.

Confirmation

The doji candlestick pattern becomes increasingly relevant when the following occur:

  • The doji is true to form with a small body and an equal open and close.
  • It is preceded by a strong trend.
  • Confirmation candles are used to confirm the reversal.
  • Overbought and oversold indicators confirm a change in market direction.

Forex Trading Ideas

The doji may be traded alone, or with a combination of signals and/or indicators. For example:

  • Step 1 – Wait for a doji to appear during an established trend.
  • Step 2 - Confirm the trend reversal with at least one confirmation candle.
  • Step 3 – Further confirm overbought or oversold conditions using the RSI – Relative Strength Index.
  • Once conditions 1 – 3 are met place an entry order.
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Customization

By adding additional confirmation signals and indicators the doji has the potential to become increasingly accurate in predicting trend reversals and entry points. FxSpyder provides integrated customization tools for hands free trade automation using the JavaScript Object Model. Full details are included in the Help Section of the FxSpyder trading application.

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