I made big money with de Doji, and then…

Photo by Alexander Mils on Unsplash

The Doji candlestick pattern can be a useful indicator in technical analysis, but its effectiveness depends on the market context. A Doji forms when the opening and closing prices are nearly equal, signaling market indecision.

I remember the first time I used a Doji in my trading strategy. It was a perfect setup — a Doji appeared at a strong support level after a long downtrend. I waited for confirmation, saw a bullish follow-through, and entered the trade. The price shot up, and I made a big profit. I felt like I had cracked the code. But then, feeling confident, I tried the same approach on another asset class. A Doji appeared, and I jumped in without much hesitation. This time, the price barely moved before reversing against me, and I took a loss. That was when I realized that a Doji alone isn’t enough — it needs confirmation and the right market conditions.

A Doji is particularly helpful in certain situations. It can indicate a potential trend reversal when it appears after a strong uptrend or downtrend, especially when confirmed by other indicators. It also reinforces support and resistance levels when it forms at key price areas. Additionally, a Doji reflects market sentiment, signaling uncertainty and caution for traders.

However, a Doji has limitations. It needs confirmation from indicators such as volume…