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Doji Candlestick-Understanding

 

Doji-Candlestick
                                                                           Doji Candlestick

Doji Candlestick-Understanding

Doji Candlestick Pattern is very similar to Spinning Top and sometimes people get confused about it and take the wrong decision based on that. It is the same as spinning top except that the real body is always missing in Doji and if you take it flexible then very little variation can be acceptable means a very thin layer of body forms. Of course, as spinning tops the color of the Doji candle does not matter at all, if a very thin layer of body form, what matters is that open and close price is very near or same to each other. 

The Doji and spinning tools present indecision in the market. All the technical analyst takes Doji in a very different manner. Most of them treated it as a sign of reversal. Doji formation means that whatever the trend in the market is now going to be reversed or if you want to trade safe then do not take any trade on the Doji candlestick pattern. A spinning top is also very similar to Doji but the spinning top has a short or long real body while Doji is missing that body.

We will try to make some charts and understand the feasibility of this candlestick pattern;
                  The above chart of SBI has been taken from Money control website

Here we can see three Doji forms and every Doji is showing different results we cannot say that every Doji candle showing the same decision or reversal pattern.
In the first Doji, we can see that Doji forms at the downtrend and after that, it consolidates little and then starts reversal pattern, In second Doji candle it forms an uptrend and somebody could have taken a short trade here if he assumes reversal from here but there is not any change in trend and stock price moves from 171 to approx 196. In the third Doji candle also there are indecision shows as neither it is formed in downtrend nor its forms in a clear cut uptrend.

The one another example we have taken from IGL chart where we can see too many Doji formed, some can show you reversals but some don't show reversals, so it depends on our own analysis and expertise and practice. Very few technical analysts are there who take the trade on Doji and Spinning Tops. It's my advice not to trade on these and wait for one or two more candles for confirming your decision.

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I have started this blog to educate people regarding saving and investment of their hard-earned money wisely to become big, investing decisions play a very important role in our life to meet our retirement expenses and brighten our future.

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