Candle Doji: Japanese techniques in Forex trading

Doji candle is a very popular tool of graphical analysis. The candles on the chart Forex, despite their lack of independence and the variability of interpretations, is very popular, so the analysis of candlesticks on Forex has long been the obligatory analytical tools for most traders.

Forex Japanese style
Forex Japanese style

Japanese candlesticks Forex videos which you can find on any specialized information resource, have a lot of advantages, including ease of detection and visibility, and beautiful names. But informative and independence in this list are not included.

Features of candlesticks

Japanese candle stick charts allow with different degree of efficiency to obtain enough objective information about current situation on financial markets, but to plan trading activity based solely on these patterns is extremely difficult (in most cases).

The Japanese candlestick chart
The Japanese candlestick chart

Japanese candlesticks are divided into several types and classes into which the patterns are grouped according to some common feature or functional features. One of these groups will be discussed next. Japanese Doji candle (or rather, a vast collection of candles), it stands out even against the colorful diversity of patterns of candlestick analysis.

These candles are easy to find on the chart according to their main features:

  • short body;
  • long shadows, which are no less than five times to exceed the length of the candle body.

Perfect Doji candle with no body, i.e. the closing price equals the opening price.

That shows a Doji candle?

Candle Doji
Candle Doji

Candle Doji, decoding of which is a relatively simple task, as is easily seen by looking at the picture, are not very informative. Rather, they are informative, but this information relates to past periods. Do not need great knowledge and experience, to assume that the Doji candle formed on the chart during periods of uncertainty. Therefore, these patterns inform the trader that currently there is no trend.

This Doji can be trusted, but the pattern gives no clue, neither about what was the cause of “anarchy” in the market or where the market will move next.

Loyal supporters of the candlestick analysis offer a lot of options that you can use Doji patterns in speculative trading. There is even an indicator to signals Forex candle Doji – CPI (CandleStick Pattern Indicator) but, in fairness, it should be noted that virtually all data patterns are considered only as auxiliary instruments and the mentioned indicator was developed to determine patterns of graphic analysis on the chart, i.e. the practical use of this indicator is minimal.

But, despite all of the above, candlestick charts are the most convenient and intuitive, and candlestick patterns are the most popular tool of graphical analysis.

Perfect Doji

The perfect candle needs to be perfect in everything. Candle without a body, for all its visual appeal, represent a very mixed pattern. The thing is that in the absence of the body of the candles, traders are looking for (and find) information in its shadows. Shadow of a candle in Forex, according to some analysts, reflects not so much economic, how many psychological tendencies and sentiments prevailing among the traders, i.e. attempts to perform shading (their absolute and relative sizes) only multiply the chaos.

In this respect, the pattern of the Star causes tears of emotion. No body, absolutely equal to the length of the shadow, in a word, as in the classic “Beauty, among running first and no lagging…”.

Doji Star
Doji Star

Classification of Doji candles is carried out, it was discussed above, not only graphics, but also on functional features. The Doji star is classified by many experts as the turning figure, and as practice shows, such allegations have grounds. The thing is that exemplary symmetry of the figure clearly indicates that the existing trend is exhausted and traders profit and loss. No one wants to aggravate the situation.

Of course, Doji star, just like any other pattern candlestick analysis, requires further confirmation. Watching the formation of this pattern, it will be useful to analyze the trading volume of a trading instrument. The formation of Stars in the environment of a sharp decrease in trading volumes – a clear signal of a market reversal. With a slight decline in volumes – the pattern of reports on the consolidation and a possible short and shallow correction