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Glossary · Candlestick patterns

Doji

A candle whose open and close are almost equal, leaving a very small body — a sign of balance or indecision during that period.

By Sky Trade editorial teamUpdated

A doji forms when a candle closes at or very near its opening price, leaving a body that is little more than a line. The wicks can be any length. Common variants:

  • standard doji: small wicks on both sides;
  • long-legged doji: long wicks both ways — plenty of movement, no net result;
  • dragonfly doji: a long lower wick, with the close near the high;
  • gravestone doji: a long upper wick, with the close near the low.

The doji shows indecision: during that period neither side won. That is information, but not a direction. After a strong rally a doji can mark exhaustion; in the middle of a quiet range it means almost nothing, because many candles there look similar.

The standard mistake is trading a doji as a reversal on its own. A more careful approach treats it as a pause and waits for the next candle: a strong close in one direction after a doji at a key level says more than the doji itself.

On very short timeframes dojis are extremely common, simply because price doesn't travel far in a few seconds. On Sky Trade's OTC instruments they appear by chance on a random path. See the doji guide and the candlestick entry.

Example

After EUR/USD climbs 30 pips into resistance at 1.0900, an M5 candle opens at 1.08985 and closes at 1.08987 with 4-pip wicks both ways. The next candle closes at 1.0888, turning the pause into a possible reversal.

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