Doji Candlestick + Gap Up = Powerful Chart Pattern ... with David Moadel
hello friends and welcome to looking at the markets with David Modell I'm going
to show you a stock chart pattern which I like and it's not just for stocks it
can be used for crypto currencies currencies or commodities or whatever
you like and it doesn't just have to be for day trading it could be for swing
trading you could use it on the daily candlestick chart or the one or two or
5-minute candlestick chart whatever it is you like and it is not perfect it
does not work 100% of the time so be careful and make your own decisions with
decisions with these things and also I should mention that I do offer coaching
so if you need more help with candlestick patterns trading or
investing putting together a trading or investing plan because you do definitely
want to have a plan for your trading you're investing you can email me I do
offer coaching my email address is David Modell at gmail.com alright so what is
this pattern that I'm looking for well specifically I want to look for a doji
candlestick in oversold territory as measured either by the RSI or the
stochastics or MACD or whatever it is you you use to decide that a stock is
oversold so if there's a doji candlestick while the stock or whatever
it is commodity currency whatever is an oversold territory and then there's a
nice gap up in the next candle I believe that could be oftentimes a bullish sign
it could be a possible by signal if you choose to if you choose to interpret it
that way all right so let's do a little review of the doji candlestick this is a
an example of a doji candlestick and I do have a an entire playlist that can
give you the basics on candlesticks and technical indicators and so if you want
to click on the playlist in the description below this video I have a
lot of videos on you know the basics of technical trading
alright so this is an example of a doji candlestick and this is just pretty much
a neutral one the wicks or shadows are not super long if they were very long it
would be a long-legged doji candlestick and if the body the almost non-existent
body which is really just a line here if they were at the top that would be
considered a dragonfly doji candlestick and if it were at the bottom that would
be a gravestone doji candlestick and then this one is just kind of a neutral
one so what you want to look for just a really basic review on the doji is if
the opening and closing prices for this period are the same or nearly the same
then the body which is usually a box or rectangle is just flattened it's not
even a box anymore it's just a line just a horizontal line alright and so that
tends to oftentimes not always but sometimes it signals either neutrality
or indecision and if there is indecision then it could signal a turnaround in
price and so if this is you know if the stock went down down down and then maybe
started to go sideways a little bit not down as fast and it's in oversold
territory maybe and on the RSI it's below 30 or on the stochastics it's
below 20 for example and then you see this that could be a potential signal
for a turnaround possibly in the making alright for it could be a what they call
a reversal signal reversal candle all right so that's the doji and then I tend
to look for a gap up a nice gap up in the next period the next candle alright
so here's another example of just pretty much a neutral
doji it's not a long-legged one or gravestone or dragonfly or anything
special like that and then you got your gap up in the next one and a really nice
gap up to with plenty of momentum not only was it a gap up but it closed
higher than it opened for sure and so that could be a very bullish
signal especially if this was preceded by candles going down and then kind of
just slowing down and then going sideways and if the RSI or stochastics
whatever indicate its oversold and then jumping out of oversold territory that's
really nice now sometimes people ask well does it have to be a strictly a
doji can it be a spinning top where the body is a rectangle it's not exactly
flat sure I don't know if this is as powerful a signal though this is an
example that's not as powerful for two reasons first potentially not as
powerful for two reasons first it may not be as much of an indecision and
therefore turnaround or a reversal type of candle you know I mean this one may
not be as powerful because you know it's not strictly a doji it is a spinning top
where there is a little bit of difference between the opening closing
prices all right whereas this one you really had indecision you know the
opening and closing we're really really flat they're really really similar okay
and also notice that in this one the gap up isn't as big all right
and so this one just to me does not look as powerful as this one where the gap
the gap up is bigger and this is a true doji rather than a spinning top
all right so where do I want to see this happen well you may want to look for
something like this this is an example I used RSI you know this is 30 this is 70
standard settings but this could just as easily be stochastics with 20 and 80 or
whatever you can use MACD but notice that this was in oversold all right it
was nice and cheap and you know it was going down but not not really very fast
the the downward momentum seems to be pretty slow here and then you get a nice
gap up and look what happened after that up up and away
when can you sell well if you're going to use for example this is RSI if this
is 70 reading on RSI then you could wait until it goes into overbought or you
could even wait until it goes into overbought and then
goes back out of over by you know crosses back below 70 and then you could
have sold you know here or here either way it's around the same price
it's pretty similar but if you waited until it went into overbought and then
went out of overbought territory you would have sold right about here for a
very nice profit from here to here okay so that's just one example and that's
something that you can look for alright hey if you like this video if it helped
you please give it a thumbs up on YouTube and leave a comment have you
used this kind of pattern have you heard it before I think it's pretty
interesting and if you have not subscribed to my channel yet please do
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new educational financial videos and feel free to contact me by email David
Modell at gmail.com if you're interested in the coaching hey thanks a lot I
really appreciate it and I'll talk to you again soon
you