Doji Candlestick Pattern Explained // candle indicator analysis trading strategy chart stock spinning top day examples david moadel
welcome to looking at the markets with David Modell today we're gonna learn
about doji candles now I already made a video about Candlestick charts just the
basics so if you don't really understand Candlestick charts at all then you might
want to check out that video and I'll put a link to it in the description all
right but if you already understand the basics of how to read candlesticks then
the doji candlestick pattern can be very very interesting to you all right so
let's check it out these are all doji candlesticks and you might notice they
all have something in common they all have basically no body it's
totally flat okay no body all right usually in a
candlestick if there's a body it's it's going to be a rectangle of some sort
either hollow or filled in but in this case what this means is that the open
and the close of the day or the minute or you know depends on the timeframe of
the candle but the the open and the close for that candle were about the
same okay they're going to be really close together so wherever it opened for
that period and wherever it closed the price for that period they're about the
same and so there's really going to be no body or very little all right and
notice that they're still wicks though so this one has a small upper wick and a
small lower wick but hardly any body this one has more of an upper wick than
lower this one has more of a lower wick and an upper but they're all doji
candles all right and then if there is a long
wick and the the body or lack thereof is at the top all right meaning that the it
opened here and then the price went way down and then came all the way back up
and closed right about where it opened for that period
that's called a dragonfly dragonfly doji and that's a special type of doji here's
another special type of doji candle and this is the gravestone doji sounds
ominous right okay so it's the opposite of the dragonfly doji where it opened
here at the bottom and there's a long wick above so the price went up up up
and then turned around and went down down down and then closed again right
about where it opened all right that's what makes it a doji is that all of
these have the same thing in common where you know the closing the open and
the close are at about the same place all right now the dragonfly doji is
rather bullish because think about it it opened here and then the Shorter's
and the sellers all tried to push it down they tried and tried and they did
push it down temporarily but then it came right back up okay so any attempts
to short it or push it down didn't last very long came right back up and at the
end of the period it closed right about where it opened all right and so you can
have some expectation that perhaps in the future in the near future the price
might go up and not a hundred percent guaranteed but it could happen okay
and with the gravestone doji the doji it's the opposite it opened here and
you know all the bowls and all the people all the buyers you know pushed it
up up up up but it couldn't hold it and it went down down down and closed right
about where it opened and then you might expect some more downward price action
in the in the next candles again no guarantee and this is just one thing to
look at out of many factors you also want to look at support and resistance
and things like that and look at a look at other indicators alright and one
thing that like this doji for example this would be an indecision type of
candle okay perhaps a reversal might come alright so if the previous candles
were down down down but then you saw this candle that might indicate some
indecision okay the the market wasn't really sure whether it wanted to keep
going down and you know there's equal buying pressure and selling pressure it
was equal for that for that period for that candle and so you might have a
reversal in the making it might go back up again this is not a perfect indicator
but it could happen it that's I've seen it happen many times all right so a doji
like this could be indecision this one might be a little bit more bearish than
bullish this one might be a little bit more bullish than bearish this one's
definitely tending toward the bullish and this one's tending toward the
bearish all right so let's look at some examples and these are daily candlestick
charts and I want to thank stockcharts.com
that's where I got them from when I give them credit all right can you find the
doji candle that indicated a reversal well if you said it's right there then
your rights okay and notice let's go back a little bit
which one does that one look like it looks kind of like this one doesn't it
like a dragonfly doji it's not perfect all right
it's very it's it's not very common that you're gonna find find it exactly at the
top or exactly at the bottom oftentimes there's usually a little bit of a wick
above or below all right but anyway this is definitely bullish looking and it
turned out to be quite bullish over the next few candles okay you could have
made a nice profit there all right let's take a look at some other examples this
is Tesla and can you find a reversal that's bearish well if you said it's
over here you would be correct okay and this is one of those indecision type
candles all right you can see the price action went up steeply and then started
to go kind of sideways ish and here's an indecision type of doji candle and then
we saw it just go straight down after that and so if somebody had shorted it
here they would have done well or if they had bought it here and just taken
profits here because they saw that candle they would have been right to do
that here's Johnson & Johnson the J the daily chart all right can you find any
of these doji candles well the harder to find one is right here okay but this
turned out to be bullish but it was a turning point and you might have seen
this one though okay and again it's not a perfect dragonfly doji but it's pretty
close the upper wick is not that big alright but the lower wick is quite
large and we saw that this was a turnaround
all right and let's look at Netflix I'm sure you can find the doji candle by now
right yeah there it is right there okay indicated a turn around for sure
all right and so those those are just a few examples they're not perfect but
they work you'd be surprised how often they do work because of what they
represent they can either represent indecision or a change in direction and
you want to look at the size of the wicks whether you've got more of an
upper wick or a lower wick that makes a difference as well
all right so explore those on your own and I hope you found this introduction
to doji candles helpful if you did then please give this video a thumbs up leave
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updates on my financial educational videos and if you'd like some help with
technical indicators candlestick charts or putting together a trading or
investing plan because you need to have one you can email me at any time my
email address is David Modell at gmail.com thank you so much for watching
and listening and I'll talk to you again soon
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