Doji candle
Also called: Doji, Long-legged doji, Dragonfly doji, Gravestone doji, Indecision candle, Doji mumu
A candle whose open and close are nearly the same, leaving a razor-thin body; it shows buyers and sellers fought to a draw in that period.
4 min read · one puzzle on the page
What is a doji?
A doji is a candle where the open and close sit at or very near the same price. The body shrinks to almost a line, while the wicks can be short or long. If the body is tiny relative to the candle's full range, roughly under a tenth of it, it counts as a doji.
What it tells you is indecision. During that candle price went up and down but ended where it started. Neither buyers nor sellers could pull the close their way.
A doji isn't a directional signal on its own; it's a snapshot of a situation. At the top of a long rally it can show buyers stalling for the first time. The same candle in the middle of a sideways market is just another candle. A candle's meaning is where it stands.
How do you spot a doji on a chart?
Start with the body. Open at 1.2650, close at 1.2651, high at 1.2672 and low at 1.2628 gives you a 44-pip candle with a 1-pip body, a doji. The colour of that body tells you very little.
Then look at the wicks. Long wicks on both sides make a long-legged doji: both sides pushed hard and both got pushed back. Open and close at the top of the candle with a long lower wick is a dragonfly doji; the selling was fully reclaimed. The reverse, a long upper wick with the close at the low, is a gravestone doji.
The real work is context. Before taking a doji seriously, ask where price is: at clear support, at resistance, at the end of a sharp move? Then wait for the next candle. If the candle after a doji under resistance closes below the doji's low, sellers have broken the tie in their favour.
If you trade it, the logical stop sits a little beyond the doji's opposite end. Selling after a doji at resistance, the stop goes above the doji's high; if price gets there, the idea that sellers are in control is invalid.
Try it on a chart
You don't need to hunt for a single doji here; this chart shows its bigger version: price has been going back and forth in a tight range and neither side can pull the close its way. Look at where price stands inside the range and where you could anchor a stop.
Price has been going back and forth in a tight range for a while. Should you do anything?
No sign-up needed. Make your call; when the chart opens you'll see why.
The most common doji mistake
Treating every doji as a reversal signal. Books show the doji at the top next to the turn, so beginners go looking for a counter-trend trade on each one. A doji only says the trend paused for one candle, and trends pause and carry on all the time.
Reading meaning into dojis in a sideways market. When price chops in a tight range, half the candles look like dojis anyway. A doji in the middle of a range shows indecision in a place where everyone is already undecided; that's not new information.
Not waiting for confirmation. Enter the moment the doji closes and you've taken a position without knowing which way the indecision will break. The next candle's close is usually worth the wait. You give up a little price, but in return you see which side won, and your stop rests on the end of a real candle instead of a guess.
When does a doji tell you nothing?
On very small timeframes and in quiet hours, dojis are everywhere. On a 1-minute chart during a slow Asian session hour, a run of dojis while price twitches a few pips is normal, and most of them mean nothing.
They multiply before news too. Just ahead of a major data release the market waits and candles narrow. That indecision comes from the calendar, not the structure, and it vanishes with the release.
And a single doji in the middle of a strong trend is usually just a breather. If a strong candle in the trend's direction follows, the doji showed you a short pause, not a reversal.
Frequently asked questions
Is a doji bullish or bearish?
Neither on its own; a doji says buyers and sellers ended that period level. Its meaning comes from where it appears and the candle that follows. A doji at resistance after a long rally, followed by a close below its low, points to weakness. A doji at support followed by a close above its high suggests buyers have taken over.
What is the difference between a dragonfly and a gravestone doji?
In a dragonfly doji the open and close are at the top of the candle with a long lower wick: price dropped but the selling was completely reclaimed. In a gravestone doji they sit at the bottom with a long upper wick: the rally was fully given back. A dragonfly means more at support, a gravestone at resistance; in the middle of a range, both carry little information.
What should you expect after a doji?
Wait for the next candle's close. Indecision always breaks one way, and that close tells you which. If it closes above the doji's high, buyers have the edge; below its low, sellers do. A candle that wicks out and comes back means the indecision is still there, and in that case waiting longer is usually the healthiest choice.
