December 19, 2020

Doji Star Candlestick Pattern

Doji Star Candlestick Pattern

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The doji star is a neutral signal that occurs when a single candle has opening and closing prices that are close to the same. A single doji star candle alone means that buyers and sellers reached equilibrium during the candle period, ending at almost the same price that it started. When a doji star appears inside an existing trading range it reinforces that a chart is going sideways in price. 

Doji Star Candlestick Pattern

Technical analysis does consider the doji star a reversal signal if it occurs at the end of a trend between candles that are both above or below the doji star. In Japanese, “doji” means a mistake, implying that this candle is rare as both the buyers and sellers were mistaken about price as it moved both above and below the open only to return to where it started. 

Doji stars are neutral patterns as individual candles but can be part of more complex patterns as surrounding candles give them meaning inside the context of a price move. They are neutral when they occur inside trading ranges, they can be bearish as they occur at the end of an uptrend as price starts going lower, and they can be bullish at the end of a downtrend if price then reverses and begins to go higher.