Doji Candlestick Patterns
Doji candlestick patterns can be either a bullish or a bearish reversal candlestick pattern depending upon where it develops in the trend for the share price.
Doji candlestick patterns that develop at the bottom of downtrends are bullish reversal candlestick patterns and are also referred to as Southern Doji candlestick patterns. Doji candlestick patterns that develop at the top of uptrends are bearish reversal candlestick patterns and are also referred to as Northern Doji candlestick patterns.
Most Doji candlestick patterns are easy to identify on a stock chart because they have very small real bodies and at least one long shadow (either the upper or lower shadow) if not two long shadows (both its upper and lower shadow).
It is a good thing that most Doji candlestick patterns are easily identified by their small real bodies since Doji typically represent very strong trend reversal signals. Relatively quick trading action is necessary after Doji Candlestick Patterns develop on charts.
Let’s start by first separating Doji candlestick patterns between bullish and bearish candlestick patterns.
Northern Doji Candlestick Patterns
Northern Doji candlestick patterns are bearish reversal candlestick patterns. A Northern Doji candlestick pattern develops at the top of an uptrend, or the “north” end of a chart. There are several different types of Northern Doji candlestick patterns.
Doji candlestick patterns that are categorized as Northern Doji candlestick patterns consist of Abandoned Baby Tops (a special type of Evening Doji Star), Evening Doji Stars, Gravestone Doji (a special type of Shooting Star), Hanging Man candlesticks, Long-Legged Doji (not illustrated) and Shooting Stars.
Southern Doji Candlestick Patterns
Southern Doji candlestick patterns are bullish reversal candlestick patterns. A Southern Doji candlestick pattern develops at the bottom of a downtrend, or the “south” end of a chart. There are several different types of Southern Doji candlestick patterns.
Doji candlestick patterns that are categorized as Southern Doji candlestick patterns consist of Abandoned Baby Bottoms, Hammers, Inverted Hammers, Long-Legged Doji and Morning Doji Stars.
Requirements
Listed below are the requirements for most Doji candlestick patterns.[s2If !current_user_can(access_s2member_level1)]…..
If you are interested in reading more about Doji candlestick patterns, you must first login. Trendy Stock Chart members can access the characteristics, support and resistance areas and trading strategies for all the different types of Doji candlesticks.
If you are not a Trendy Stock Charts member, consider subscribing today. There are several different subscription plans available.[/s2If][s2If current_user_can(access_s2member_level1)] However, I would refer to the individual webpages for each candlestick pattern for its specific detailed requirements as Doji come in many shapes and sizes.
- Doji candlestick patterns can have either red colored or green colored real bodies
- The real bodies are typically very small or sometimes no real bodies at all when the opening and closing prices are the same
- Doji candlestick patterns must have either an upper shadow or a lower shadow while some some have both
Characteristics & Observations
Listed below are some of the characteristics for Doji candlesticks that I have observed over the years. First, let’s start with a bold statement about Doji candlestick patterns.
That is a pretty bold statement. If you want to be lazy, make sure to at least learn how to identify a Doji candlestick pattern and what its development usually means.
Doji candlestick patterns can act as either bullish or bearish reversal patterns, depending upon where the Doji develops in the current trend.
How do you know if a Doji candlestick pattern developed near the bottom of a downtrend or near the top of an uptrend? Sometimes candlestick patterns alone are sufficient to recognize changing trends. Other times it becomes necessary to supplement candlestick patterns with another method or a technical indicator, like a MACD Histogram.
Trading Strategies
Since Doji candlestick patterns typically represent trend reversal signals, shorter-term traders should act very quickly after the development of any type of Doji candlestick pattern.
Most Doji candlestick patterns tend to develop on volume that is heavier than normal, sometimes extremely heavy volume. Due to the heavy volume associated with Doji candlestick patterns, you will often see Doji candlestick patterns develop during both the climax volume and the capitulating volume processes. This is one of the major reasons why most Doji candlestick patterns are associated with major trend reversals. A Doji candlestick pattern is a classic “bulls vs. bears” battle royal.
Longer-term traders should also act quickly, but their first course of action should be to analyze the trend of one larger degree to determine the longer-term view and appropriate course of action to take based on that view.
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