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  • Category: Stock Market

    How do I analyse the stock trend from Doji candle?


    Are you planning to carry out fundamental and technical analysis of stock behavoiur? Looking out for detailed information to understand the behavior and also know about the formation of Doji candle? Check out responses from experts here.

    Stock's behavior can be studied by technical analysis and fundamental analysis. In technical analysis various charts and patterns are tool to estimate the future price of the share. I want to know what is the effect of the Doji candle when viewing the candle chart of a company's share price patten. What is the meaning of the formation of the Doji candle?
  • Answers

    4 Answers found.
  • This pattern is having a single candle. In this method, the opening value and the closing value of the stocks will be equal. This pattern will give us an idea between the buyers and sellers. It is a very common system used in the stock market.

    There are four types of Doji candlestick patterns:

    1. Neutral Doji: When buying and selling activity is at equilibrium this pattern will arise. The day's high and low will be taken into account. in this pattern.

    2.Long-Legged Doji: This is a long candlestick pattern. This pattern will arise when supply and demand forces are at equilibrium.
    3.Gravestone Doji: This pattern forms at the bottom of a downtrend
    4. Dragonfly Doji: This pattern forms at the peak of an uptrend

    Candlestick patterns are a combination of one or more candlesticks. This study is applicable for short time periods. This method is used for short-term entry and exit points

    drrao
    always confident

  • The movement of share prices are depicted by candlestick representation. The body of the candlestick tells the opening and closing prices. The colour of the body gives the direction. Green or white means increase while red or black shows price decrease. The wick or shadow gives the high and low value of share within the day (intra day movement).

    These candlestick presentations form certain patterns known as Doji candlestick patterns and can be used by the analysts along with other information for predicting the market trends with more confidence.

    A thin body in the Doji pattern is suggestive of indecisiveness in the market. So, it becomes difficult to gauze the direction of the market i such a situation. Longer wicks or shadows are indicative of volatility while small length of these wicks or shadows shows lower activity.

    Some of the popular Doji patterns are -
    Star - It suggests low activity and indecisiveness in the particular scrip and also indicative of a near reversal.
    Long-legged - This is similar to star but shows more activity and usually represents early signs of reversal.
    Dragonfly - They look like 'T' and suggest that markets might move upwards.
    Gravestone - They appear like an 'inverted T' and suggest a decreasing price trend.

    Though the market analysts use the Doji patterns but they are only indicative in their nature and are to be used along with other forms of conventional and traditional technical analysis.

    Knowledge is power.

  • A dogi is a trend of the session in which the candlestick has an open and close intervals that corresponds to be virtually equal.These components reflect the patterns in both the ways - high and low side. To sum up dogi are the neutral patterns that include a number of patterns.
    In Japanese, dogi means the blunder mistake referring to occurance of the rarity of having the open and close prices being exactly the same.
    Dogi formations consist of three major types - gravestone, long legged and dragonfly.
    What does the dogi indicate?
    Technical analysis suggest that there is great fluctuation of stock price indicating that past performance has nothing nothing to do with the future price performance.
    Therefore technical analysts use tools to help sift through the noise to find the highest probable trade.
    A dogi referring to both singular and plural form can be created when the open and close for the stock are virtually the same. From the auction theory angle, dogi represent indecision on both the sides - buyers and sellers. Dogi can be seen during the period of consolidation and can help analysts to identify the potential price breakouts.

  • A 'Doji candlestick' is one of the most unique formations and technical analysis of financially traded assets. A Doji candlestick has a wick and a body that helps to form a pattern. The vertical line is called the 'wick' and the horizontal line is called the 'body'. The pattern will have a fixed width i.e. the body but the height will vary i.e. the wick or vertical line. The pricing is shown by the wick or the vertical lines and the opening and closing price of a share is understood by the body or the horizontal line.

    According to the pattern formed by the Doji candlestick, there are 4 types of Doji candlestick.
    i) Common: The shape of this pattern is like a plus or cross (+). This pattern shows the common pattern where buying and selling are neutral.
    ii) Long-legged: The pattern will show a long vertical line and the same width horizontal line like a dagger (+). It will indicate the demand and supply fluctuations on its vertical line.
    iii) Gravestone: It is in the shape of an inverted 'T'. It indicated the lowest price or the fall.
    iv) Dragonfly: It is in the shape of an inverted 'T'. It indicated the highest price or the rise.

    In the 'Doji candlestick,' we have two traders which help to form the pattern i.e. the bulls and the bears. When the market opens for trading, the bullish traders try to push prices up whereas the bearish traders try to push prices as low as possible and after a certain period, it 'rests' in an equilibrium direction. The pattern formed by the up and down movements between open and close of the stock market form the wick and the pattern formed at the opening and closing of the stock market forms the body, thus forming the 'Doji candlestick' pattern.

    The 'Doji candlestick' pattern helps the trader to understand the trend of the market and that buyers or sellers are not gaining which means the shares are neutral. As it does not provide as much information that is needed, a trader needs to consider other patterns and indicators like momentum indicators, the stochastic oscillator and derivatives such as CFDs or spread bets before making a decision.

    “The most important thing in life is to learn how to give out love, and to let it come in." — Morrie Schwartz


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