The Doji candlestick is recognized by the candle’s open and close prices, which are usually the same. This produces an easy to identify small to nonexistence candlestick body that resembles a cross or plus sign and can be either black (red) or white (green) in color. The absence of a candlestick body signifies a price struggle among buyers and sellers, which failed to produce a clear winner.
Usually, a doji will have a long upper and long lower wick, which shows a price movement during the period. However, both the buyers and the sellers failed to move the market in either direction, and the result is typically a continuation pattern. Below are a few examples of the various types of doji candlesticks.
A doji is typically a continuation pattern unless found at the top or bottom of price trends. Then it can be the harbinger of an impending price reversal. If you find a doji at the end of a downward trend which is a known line of support, it could be a bullish reversal signal. The opposite is true as well; if you find a doji at the top of an upward trend that lands on a known line of resistance, a bearish reversal could be next. As always, you should confirm the price action of the next candle breaks above or below the doji before entering a reversal trade.