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Chapter 9, Part III. Simple but fundamental and important patterns. Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Doji

    Commander in Pips: The next type of candle that we will start to study is the Doji…

    Pipruit: Yeah, my uncle also has a 1980 Dodge…​

    Commander in Pips: Not Dodge, but Doji. In general this is a type of candle that has the same open and close prices. Sometimes, these candles that have very tight (hardly seen) difference between close and open price also calls as Doji. But the location this open=close price in day range makes an important difference. Here are different types of Doji:

    [​IMG]

    Here you can see that the length of shadows could be different. Despite this moment – any candle will call as Doji that has equal open and close prices.

    Pipruit: Well, it looks like Doji has the same quality as a Tweezers, at least Simple/Long-legged Doji and Four Price Doji. This means indecision, right?​

    Commander in Pips: Absolutely. Simple Doji so as 4-price Doji shows that although bulls and bears have struggled each other, pushing and tossing – nobody was able to gain a control. As a result, market calmed down and closed at the same level as open. These two types of Doji are “Cautioning” patterns.

    Pipruit: And what do they caution us about?​

    Commander in Pips: Well, so as with Tweezers, the major importance carries the preceding price behavior. If such kind of Doji appears after strong bulls run (this could be for example number of white Marubozu or at least strong candles with small shadows) it could mean that the power of bulls becomes weaker, so that market falls into indecision. The same is true for appearing of such kind of Doji after a strong down move. But it does not mean definitely the reversal, although such kind of Doji could appear as on tops (like spinning tops) as on bottoms (spinning bottoms). So using them in context with other tools, as we’ve just discussed. In fact, you can take a look at Chart #1 again and just imagine Doji instead of Tweezers – this will make the same sense.
     
    #1 Sive Morten, Dec 15, 2013
    Lasted edited by : Feb 16, 2016
    Hamza Samiullah and fran alvarez like this.
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