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Other considerations on Doji candles

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It consists of the only candle where the beginning and the end of session they coincide and therefore, it is of candles practically without real body.

These patterns are of special interest because they may be signs of change trend for if only or as part of other patterns composed of several candles.

The Doji pattern can warn of possible change of a trend, especially when it happens during a rally.

The probability of the occurrence of a change in trend with the appearance of a Doji increases if there are any of the following situations:

1) The candles after the Doji confirm the possibility of change. 2) The market is overbought or oversold. 3) The market is in an area where more Dojis do not appear.

The final recommendation that it is possible to do is that always it will be better to attend to possible Dojis, though then they are false signs, that to ignore them.

The consideration by which there is extracted that the appearance of a Doji symbolizes the end of a trend, especially if the trend is formed by large real body candles, is that this formation is indecision among investors.

Although a Doji can be interpreted both in an uptrend as a bassist, the potential of these figures loses strength when it comes to predicting the end of a downtrend.

The Doji reflect balance between buyers and sellers forces, when this happens, the balance tends to fall in favor of selling forces for market psychology itself.

Thus, a Doji on a bullish rally could point a buyer's market exhausted. But if it appears during a fall, there are many possibilities for the further descending.

Nevertheless, if this Doji had been accompanied by a signal generated by the alert another indicator, would force gain the ability to change.

Dojis classification: Depending on the form in which there are formed the figures Doji, one or another name assumes to them. Basically, this will depend on the size of the shadows of the candle, because, of course, to the absence of body. They differ Dojis three distinct classes:

1) Doji "long legs": upper and lower shadows especially long (undecided signal, appears in both parts high and low of trends).

2) Doji "Gravestone": long upper shadow and none or almost no low shadow (bearish signal if it appears after an uptrend).

3) Doji "Dragonfly": long lower shadow and none or almost no upper shadow (bullish signal if it occurs after a downtrend strong).

There are 2 possible patterns Doji derivatives that can become formations of change, depending on the level where you are closing and opening:

1º) The "hammer" and the "inverted hammer" defined with short body, very close to the maximum/minimum of the day, green and shadow bottom/upper long 2 or 3 times your body and no or almost no shadow upper/bottom. If they appear after a downtrend is BULLISH.

2 º) The "Hanged Man" and the "Hanging Man inverted" or "shooting star", defined with short body, very close to the maximum/minimum of the day, red and shadow bottom/upper long 2 or 3 times your body and none or almost no shadow upper/bottom. If they appear after an uptrend is BEARISH.

Abbreviations used in graphs:

Mx: Maximum Mn: Minimum C: Closing A: Opening

Source: Traderpirata.com

Erick Gálvez
Author: Erick GálvezWebsite: http://www.asdforex..comEmail: This email address is being protected from spambots. You need JavaScript enabled to view it.
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ASDForex manager and professional trader since 2008. I am also Aleforex.com manager where you can view the services that I give
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