65-Day Academy · Day 7 · Reading Charts
Doji — the Standoff
What it looks like
A doji forms when the open and close are (nearly) identical: a cross or plus shape. The wicks can be long or short — what defines it is the invisible body. The period opened, moved both ways, and ended exactly where it started.
What it means
Perfect equilibrium between buyers and sellers. That balance is only meaningful in context: after a long rally it hints buyers are exhausted (potential top); after a long decline it hints sellers are spent (potential bottom). In the middle of a range it means nothing — the market is just chopping.
How to act
Never trade a doji alone. It is a "pay attention" flag, not a signal. Wait for the next candle: a strong green close above the doji after a decline = bulls confirmed; a strong red close below after a rally = bears confirmed. Long-legged dojis (long wicks both sides) mark even fiercer fights — the rejection levels they print become short-term support/resistance.
What you'll practise
After a strong 7-day rally, a doji prints with a long upper wick. Next day: a solid red candle closing below the doji's open. Read?
20 XP in the app · intermediate
Sources
- DojiInvestopedia
- Japanese Candlestick Charting TechniquesSteve Nison
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All lessons are for educational purposes only and are not individualized financial advice, a recommendation, or a solicitation to buy or sell any security. Options involve substantial risk and are not suitable for every investor.