A doji forms when the open and close are virtually equal, leaving a tiny body with wicks on one or both sides. It is the chart's picture of indecision: buyers and sellers fought to a standstill and price finished essentially where it started.
What it means
A doji is not a signal on its own — it is a pause. Its importance comes from where it appears. After a strong trend, a doji says the dominant side has lost steam and a turn or consolidation may be near. In the middle of a quiet range it is just noise.
Useful variants
- Long-legged doji — long wicks both sides; maximum indecision and volatility.
- Gravestone doji — long upper wick, no lower; buyers pushed up and were rejected (bearish at tops).
- Dragonfly doji — long lower wick, no upper; sellers pushed down and were rejected (bullish at bottoms).
How to use it
Treat a doji after an extended move as a heads-up, then wait for the next candle to confirm direction. A doji at a known support or resistance level, especially with a rejection wick pointing the right way, is far more meaningful than one floating in open space.