Doji and indecision candles
Open and close nearly equal: neither side won. Momentum may be fading or about to resume.
What it is
A doji forms when the open and close are almost the same. It shows balance. After a strong run it can warn that momentum is slowing; inside a range it is just noise.
A doji is never a signal by itself. Wait for the next candle: if it breaks in the direction of the prior trend the move resumes; if it breaks against it, a reversal may be starting.
How to use it
- Note the trend before the doji.
- Mark the high and low of the doji.
- Wait for a close beyond either side.
- Trade in the direction of the break with a stop at the opposite side.
Indecision means wait, not reverse.
Common mistakes
- Calling every small candle a reversal.
- Shorting a strong trend because of one doji.
- Trading dojis during low-volume hours when they are common.
Practise it in TradeDesk X
Micro’s momentum score drops when flow is balanced (about 50% buyers), which is the order-flow version of a doji.
Related lessons
🕯
Engulfing candle
A candle whose body fully covers the previous one signals a sudden change of control.
🕯Inside bar breakout
A candle inside the previous candle’s range marks a pause. The break shows the next direction.
Educational content only. Nothing here is financial advice or a recommendation to buy or sell anything. Trading leveraged products can lose more than you deposit. Practise with paper trading first and never risk money you cannot afford to lose.