Doji

The doji (pronounced doe -gee) is formed when the opening and closing price for the day are the same. The share price moved higher and/or lower during the day however the closing price was the same as the opening price. The colour of the doji can be either red or green. The doji is a reversal pattern, which signals a balance between supply and demand. Buyers cannot push the share higher and sellers cannot push the share lower indicating balance.

A reversal will occur if the sellers take over from the buyers after a strong up trend. Doji patterns appear many times and it is important to confirm the change in trend before acting on this pattern. If there are many doji present it signals the price is in balance and will crab sideways.

Bearish Doji Star

The bearish doji star is a combination of two candles. The first candle is open and green, the second candle gaps or jumps higher the next morning and the forms a doji. The interest in the share has been so strong that the share gapped higher at opening time however could not push higher during the day. This is a stronger signal than the doji on its own and is sometimes called an evening star. It is likely that the share price will drop after this signal.

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