What Is a Doji Candle?
A Doji is a candlestick where the opening and closing prices are nearly equal, resulting in a very small or nonexistent body. The word "doji" comes from Japanese and means "the same thing" — referring to the open and close being at the same level.
A Doji represents market indecision. During the candle's timeframe, buyers and sellers fought for control, but neither side won decisively. The price moved up and down but ultimately returned to where it started. This indecision is most significant when it appears after a strong directional move.
Above: The four main types of Doji candles. Each type tells a slightly different story about the battle between buyers and sellers.
The 4 Main Types of Doji
Standard Doji — Equal upper and lower shadows, tiny body in the middle. Pure indecision. Neither buyers nor sellers gained an advantage. This is the most common type and signals a potential pause or reversal.
Long-Legged Doji — Very long upper and lower shadows, tiny body. Extreme indecision — price moved significantly in both directions but closed near the open. This signals high volatility and uncertainty, and is particularly significant at key levels.
Dragonfly Doji — Long lower shadow, no upper shadow, body at the top. Buyers rejected lower prices and pushed back to the open. This is a bullish signal when it forms at support — it shows that sellers tried to push price down but buyers completely overwhelmed them.
Gravestone Doji — Long upper shadow, no lower shadow, body at the bottom. Sellers rejected higher prices and pushed back to the open. This is a bearish signal when it forms at resistance — sellers overwhelmed buyers who tried to push price higher.
Doji at Key Levels
A Doji in the middle of a range is largely meaningless — indecision is normal when price is between levels. The Doji becomes significant when it appears at a key support or resistance level, because it shows that the market is uncertain about whether that level will hold.
Above: A Doji forming at a key support level on BTC/USDT 4H. The indecision at this level signals that sellers are losing momentum and a reversal may be near.
Dragonfly Doji — Bullish Reversal
Above: Dragonfly Doji at support on SOL/USDT 4H. The long lower shadow shows sellers pushed price down significantly, but buyers completely recovered the move. This is a strong bullish signal at support.
Gravestone Doji — Bearish Reversal
Above: Gravestone Doji at resistance on ETH/USDT 1D. Buyers pushed price significantly higher, but sellers completely reversed the move. This is a strong bearish signal at resistance.
Doji in Different Market Contexts
Above: The same Doji candle in three different contexts. In an uptrend at resistance, it signals a potential reversal. In a downtrend at support, it signals a potential bounce. In a sideways market, it is largely meaningless.
How to Trade Doji Candles
Entry rule: Never trade a Doji alone. Always wait for the next candle to confirm the direction. If a Dragonfly Doji forms at support, wait for the next candle to be bullish before entering long. If a Gravestone Doji forms at resistance, wait for the next candle to be bearish before entering short.
Stop loss: For bullish Doji setups, place the stop below the low of the Doji. For bearish setups, place the stop above the high of the Doji.
Win rates: Dragonfly Doji at support: 62%. Gravestone Doji at resistance: 61%. Standard Doji at key levels: 55%. Long-Legged Doji at key levels: 57%.