Doji

The Doji is a candlestick patterns indicator used in Skyrexio Strategy Builder for pattern recognition and reversal/continuation signals.

Introduction

The Doji is a neutral indecision candlestick pattern that signals potential trend reversal or consolidation. This single-candle pattern features virtually equal opening and closing prices, creating a cross-like appearance that indicates market indecision and potential turning points.

How Doji Works

Doji is a single-candle indecision pattern with specific characteristics:

• Equal open/close - Opening and closing prices are virtually identical • Cross-like appearance - Creates a small body with upper and lower shadows • Market indecision - Shows balance between buying and selling pressure • Reversal potential - Often appears at trend extremes before reversals • Context matters - Significance depends on location within prevailing trend

Pattern Psychology: The pattern shows neither buyers nor sellers gained control during the session, creating market indecision. This equilibrium often occurs at important decision points and frequently precedes significant price movements.

Key Characteristics

Attribute	Details
Category	Candlestick Patterns
Type	Indecision/Reversal Signal
Primary Use	Trend reversal, consolidation identification
Timeframe	All timeframes supported (1m to 1M)
Confirmation	Volume, trend context, subsequent price action

Strategy Applications

🟡 REVERSAL STRATEGY (Primary Use)

Doji is primarily a REVERSAL signal - indicating potential trend changes when appearing at extremes.

Base Entry Order (Context-Dependent)

Base Order Condition: Doji at Trend Extreme
First Condition: Doji
Timeframe: 1H

Additional Confirmation:
First Condition: RSI
Timeframe: 1H  
Operator: Greater Than
Second Condition: Value
Value: 70

(For bearish reversal at resistance)

Alternative Entry (Bullish Reversal)

Base Order Condition: Doji at Support
First Condition: Doji
Timeframe: 1H

Additional Confirmation:
First Condition: RSI
Timeframe: 1H  
Operator: Less Than
Second Condition: Value
Value: 30

(For bullish reversal at support)

Take Profit Orders (Reversal Strategy)

Rule 1: Exit condition - Reversal target reached
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: High Price
Timeframe: 1H

OR

Rule 2: Exit condition - Momentum exhaustion
First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 75

OR

Rule 3: Exit condition - Opposite doji appears
First Condition: Doji
Timeframe: 1H

Stop Loss Orders (Reversal Strategy)

Rule 1: Stop loss - Doji invalidated by strong move
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H

OR

Rule 2: Stop loss - Volume surge breaks pattern
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Rule 3: Stop loss - Trend continuation confirmed
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Below
Second Condition: MACD Signal Line
Timeframe: 1H

🔄 CONSOLIDATION STRATEGY (Secondary Use)

Ranging Markets: Multiple Doji candles often indicate ranging conditions requiring different strategies.

Range Trading Setup

Base Order Condition: Multiple Doji in Range
First Condition: Doji
Timeframe: 1H

Additional Confirmation:
First Condition: RSI
Timeframe: 1H  
Operator: Greater Than
Second Condition: Value
Value: 45

AND

First Condition: RSI
Timeframe: 1H  
Operator: Less Than
Second Condition: Value
Value: 55

Advanced Strategy Combinations

Multi-Timeframe Doji Analysis

Setup

Higher Timeframe Confirmation:

• Daily: Doji + RSI at extreme

• 4H: Trend showing signs of exhaustion

• 1H: Doji execution + Volume analysis

Execution

Entry: Wait for confirmation candle after Doji Target: Previous swing high/low Stop: Beyond Doji range

Support/Resistance Doji

Setup Process:

1. Price approaches key support/resistance level

2. Doji forms at the level

3. Volume analysis for confirmation

4. RSI shows extreme reading

Execution:

• Base Order: Doji at key level

• Additional: Confirmation candle direction

• Take Profit: Opposite extreme levels

• Stop Loss: Break of key level with volume

Risk Management Guidelines

Position Sizing

Strategy Type	Position Size	Conditions
Reversal Strategy	Reduced (50-75%)	Wait for confirmation
Range Strategy	Standard	Multiple confirmations
High Volume	Increase confidence	Volume supports pattern
Low Volume	Reduce size	Wait for confirmation

Pattern Reliability Factors

High Reliability

✅ Appears at established support/resistance ✅ Confirmed by volume analysis ✅ At trend extremes with momentum divergence ✅ Followed by confirmation candle ✅ Multiple timeframe alignment

Low Reliability

❌ Appears in middle of strong trends ❌ Low volume confirmation ❌ No clear support/resistance context ❌ No follow-through confirmation ❌ Mixed signals from other indicators

Best Practices

For Reversal Strategies

1. Wait for confirmation - Never trade Doji alone, wait for next candle

2. Context is key - Most effective at support/resistance levels

3. Volume analysis - Confirm with volume patterns

4. Trend extremes - Best signals occur at overbought/oversold levels

For Range Strategies

1. Multiple Doji - Series of Doji indicates ranging conditions

2. Support/Resistance - Trade between established levels

3. Quick profits - Take profits fast in ranging markets

4. Tight stops - Use close stops in consolidation

Common Mistakes to Avoid

• Trading alone - Never trade Doji without confirmation

• Ignoring context - Context determines Doji significance

• No volume - Always analyze volume with Doji patterns

• Wrong timing - Wait for confirmation before entering

Market Conditions Analysis

Market Type	Reversal Effectiveness	Range Strategy Effectiveness
Strong Trend	🔴 Low (trend continuation likely)	🔴 Very Low (avoid)
Trend Extreme	🟢 High (reversal potential)	🟡 Medium (watch for range)
Ranging	🟡 Medium (at boundaries)	🟢 High (consolidation signal)
High Volatility	🟡 Medium (needs confirmation)	🔴 Low (whipsaws)
Low Volume	🔴 Low (wait for confirmation)	🔴 Low (avoid)

Related Patterns

Pattern	Relationship	Link
Dragonfly Doji	Bullish variant	Dragonfly Doji
Gravestone Doji	Bearish variant	Gravestone Doji
Hammer	Similar indecision	Hammer
Hanging Man	Similar indecision	Hanging Man

Conclusion

Doji is primarily an INDECISION signal that requires confirmation and context analysis. Its significance depends entirely on where it appears and what follows it. Never trade Doji patterns in isolation.

Key Takeaways

• PRIMARY USE: Reversal signals at trend extremes

• SECONDARY USE: Range identification in consolidation

• ALWAYS: Wait for confirmation candle before entering

• CONTEXT: Most effective at support/resistance levels with Volume confirmation

Success with Doji requires patience, context analysis, and confirmation. The pattern's neutral nature makes it valuable for identifying potential turning points, but it should never be traded without additional confirmation signals.

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