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Dojistar

Japanese Candlesticks - Doji CandlesAs traders, if we want to improve our technical analysis knowledge to better develop our price action skills, we owe it to ourselves to grasp candlestick patterns, in this case the Doji candlestick pattern. This post will go into further detail about this unique candlestick group and will also explain the psychology behind these patterns and how they can affect future price movements in the market. Before we go into further detail about doji candles, there are times this post will mention the words: 'OPEN PRICE, 'CLOSE PRICE, 'HIGH PRICE, 'LOW PRICE, 'UPPER WICK, 'LOWER WICK, and 'BODY.' So what are these? OPEN PRICE: Open means a candlestick's first price when it started. CLOSE PRICE: Close means a candlestick's last price when it ended. HIGH PRICE: High means how high the price went during that candlestick. LOW PRICE: Low means how low the price went during that candlestick. UPPER WICK: An upper wick forms when the high price of the candlestick is higher than the close price (bull candle) or open price (bear candle) of the period. LOWER WICK: A lower wick forms when the low of the candlestick is lower than the close price (bear candle) or open price (bull candle) of the period. Body: The visual difference between the candlestick's open and close prices. What is a Doji candlestick? The Doji Japanese candlestick pattern is a class of single-bar indecision patterns whose open and close prices are either identical or close to identical and therefore either do not have bodies or have very small bodies. A doji candlestick pattern generally suggests indecision or uncertainty in the markets. The reason for this is because of the psychological meaning behind a doji candle. As previously mentioned, all doji candles' open and close prices are either identical or close to identical, meaning that during the time of the candle's formation, buyers (bulls) and sellers (bears) were both at a complete standoff and neither one came out on top. There are different types of doji patterns depending on where the open and close prices are, and these types are known as: doji star, gravestone doji, dragonfly doji, long-legged doji, and four-price doji. Technical traders use the 'doji' term to refer to all of the above patterns but specifically call out a doji by its proper name when they want to be more specific, e.g., a dragonfly doji. Doji Star The doji star (also known as 'standard doji' or 'neutral doji') is a pattern that is composed of an upper and lower wick on either side of the opening and closing price that are approximately the same length. The doji star’s main features are: Identical or close to identical opening and closing prices. The upper wick and lower wick are approximately the same length. Overall, it has a cross shape. It indicates indecision: the market hesitates between two directions. When a doji star appears at the top of a bullish swing or at the bottom of a bearish swing, this is seen as a sign that there may be a possible change in the trend. The reason for this is due to the neutral formation of the candle and what it means psychologically: this candle pattern tells us that buyers and sellers were completely equal; it is not possible at this moment to judge which side of the market has the upper hand, so if a doji star appears near the top or bottom of a trend swing, then it is possible that there may be hesitation or uncertainty to continue the trend. Gravestone Doji  The gravestone doji pattern is formed by a candle that has only the upper wick. This indicates that the price tried to move higher but failed to do so and closed at a price identical to or close to identical to both the open and low prices. The gravestone doji’s main features are: A long upper wick. No lower wick Open and close prices are identical or close to identical to the low price. Overall, the pattern has an inverted 'T' shape. This pattern is most significant at the top of a bullish swing. It indicates indecision; this has a more bearish bias because of the upside rejection of the high price from the sellers. The psychology behind the gravestone doji usually indicates that the buyers might be losing power because they can no longer drive the price up and the sellers might be in control. When a gravestone doji pattern appears, especially at the top of a bullish swing, this is seen as a positive sign that there may be a possible change in the trend. Dragonfly Doji The dragonfly doji pattern is formed by a candle that has only the lower wick. This indicates that the price tried to move lower but failed to do so and closed at a price identical to or close to identical to both the open and high prices. The dragonfly doji’s main features are: A long lower wick. No upper wick. Open and close prices are identical or close to identical to the high price. Overall, the pattern has a 'T' shape. This pattern is most significant at the bottom of a bearish swing. It indicates indecision; this has a more bullish bias because of the downside rejection of the low price from the buyers. The psychology behind the dragonfly doji usually indicates that the sellers might be losing power because they can no longer drive the price down, and the buyers might be in control. When a dragonfly doji pattern appears, especially at the bottom of a bearish swing, this is seen as a positive sign that there may be a possible change in the trend. Long-legged Doji The long-legged doji pattern is just like the doji star, but with a longer upper and lower wick on either side of the opening and closing price. This pattern suggests not only market uncertainty but also more market volatility due to the longer wicks on either side. The long-legged doji's main features are: Identical or close to identical to the open and close prices. The long upper wick and the long lower wick are approximately the same length. Overall, it has a cross shape. It indicates indecision and higher volatility; the market hesitates between two directions. Four-Price Doji The four-price doji pattern (also called 'doji of four prices') is the rarest doji pattern type; it is extremely rare on the chart, especially on the higher time frame charts. It represents a straight horizontal line (only the body, without any upper and lower wicks). The pattern is formed when all four prices are the same: open, high, low, and close. The four-price doji's main features are: Completely flat horizontal body with no upper or lower wick. Overall, it has a 'dash' shape. Open, high, low, and close prices are all identical. As rare as this doji pattern is, it does form from time to time. This happens either on very low-liquid assets or when volumes severely drop on the market, for example, during holidays or near the start or close of a trading session. Be careful with short time frames! Doji candles appear far too often in shorter timeframes; traders on short-term timeframes do not generally take them as serious signals for predicting future price movements. Doji candles on shorter time frames are not as psychologically impactful as doji candles that form on longer-term charts. A big reason for this is due to the fact that it is a lot easier for a doji candle to develop in a shorter time frame than in a longer one. For example, it is far easier for a one-minute candle to have an identical or close to identical open and close price than it is for a daily candle to have an identical or close to identical open and close price. Additionally, short-term timeframes feature a lot of price noise, which can be confusing for traders. EURUSD 1 Minute Chart As you can see in the image above, doji candles appear too many times in the shorter time frames to be effective. Advantages and Disadvantages With all technical analysis methods in the financial markets, there are advantages and disadvantages to them, and doji candle patterns are no different. The advantages and disadvantages of doji candle patterns are: Technical traders use Japanese candlestick patterns to help understand and predict future price movements. Doji candles can be very effective in doing this, and traders should pay attention to them when they form on their charts as they can provide potential trading opportunities. However, due to their limitations, traders should use additional technical analysis methods alongside any doji pattern to predict future price movements. Doji candles are indecision candles and therefore do not guarantee trend reversals, but make sure you are cautious of them, observe them, and, most importantly, learn from them! Trade safely and responsibly. BluetonaFX
Education
by BluetonaFX
2
TSLA Looks Exhausted; Flashes a Reversal SignalA few months ago, SquishTrade wrote a bearish technical analysis on TSLA that forecasted a drop to a series of targets that were all reached. TSLA's downward move was more violent and rapid than anyone may have expected. Indeed, TSLA broke down from a huge head-and-shoulders pattern. Supplementary Chart A is the head and shoulders pattern that broke through its neckline in October 2022. It backtested and chopped for a bit, then fell like a stone. What seemed to be a move that would take several months to a year happened in about 2 short months. Supplementary Chart A Now, meme mania and the most-shorted stock list has lead the massive rally from October 2022 lows. This list includes stocks like TSLA, and investors filled with fear of missing out on the next massive moon event have piled into this stock. They've been helped by short-covering hedge funds who were like pigs lined up at the feeding trough but gorged a bit too long for their own health. TSLA now looks exhausted. Note that this does not mean it heads straight back to lows. It could—it already made an unexpectedly massive down move from October to December 2022, and that was after a not so pretty decline in the first half of 2022. Markets and major stocks have been inflicting pain on traders of all stripes this year, so even if TSLA decides to make new lows underneath 2022 lows, it may not do so in an obvious or expected fashion. Several technical points suggest that price will soon reverse. TSLA's price has likely exhausted this current rally higher. What happens next depends on the broader equity markets' direction, the nature of risk appetite relative to risk-free assets (government bonds such as the 10-year Treasury note, the 30-year Treasury bond, the macro environment (inflation, recession, price of money / interest rates) and TSLA's fundamentals as consumers' spending power likely begins to suffer from the rising price of money. Note the orange rectangle, which is a major supply and resistance zone. Price has rallied right up to it without consolidating for any significant time beyond a day or two. This major resistance (formerly supply under the concept of parity) coincides with the 50% retracement of the last major wave of decline (green line). A gravestone doji, evening doji star, shooting star, or spinning top has formed. Each candlestick pattern mentioned could be applied to this (perhaps the spinning top is a stretch). But the label isn't as important as what the implication it provides. It shows indecision right at a time when major resistance has been reached. Indecision is not the kind of state in which price action should be when it approaches such a significant level. But it arrived here too sharply, too fast. So it's exhausted right when it shouldn't be, right when extra momentum and vigor is needed for buyers to push through this level. Note that patterns containing the term "star" are not valid unless a third confirmation candle pushes down into the body of the candle that preceded the star. A negative divergence appears using the Bollinger Bands. The divergence is more apparent using the %B indicator rather than the Bollinger Bands themselves. This shows that while price has made higher high on February 8-9, 2023, in terms of standard deviation, the high is actually a lower high as shown by the fact that the Bollinger Bands were not pierced by the highs over the last few days. Further explanations appear on Supplementary Chart B below. Supplementary Chart B Next, consider price targets, assuming price reverses here or a just bit higher. The most obvious target is the 50% to 61.8% retracement of the current rally. Those Fibonacci levels lie on either side of the huge gap fill area, another obvious target, shown by the magenta rectangle on the Primary Chart. The list of price targets follows: Target 1: $200 (most conservative) Target 2: $171.14 (somewhat conservative) Target 3: $157.91 (moderately aggressive) Target 4: $144.67 (fairly aggressive) Target 5: $125.82 (aggressive) No one can be certain in trading, investing, and forecasting. But traders can be sleuths, examining the charts for bits of evidence to see if they tilt the probabilities in one direction or the other. The probabilities here are tilted lower in the short-term and intermediate term. Yes, price could pull back and then make a higher high after that, or price could pull back and fall to retest / break December 2022 lows. A linear regression channel from the highs suggests that the downtrend could continue this year, but that is not as certain as the likelihood of a near term reversal and decline in price that ends the current rally. Finally, consider the long-term view. The uptrend remains intact. But don't be deceived by that if you bought at $150-$180 over the last couple weeks and are counting your profits. The uptrend line remains down at $39-$45 depending on the time when it would be tagged (over the remainder of 2023). Supplementary Chart C ________________________________________ Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed. Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders. DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
NASDAQ:TSLAShort
by SquishTrade
12
Nasdaq Evening Star? 🎄 I am curious of others thoughts on this monthly candle close. Not only the Nasdaq but Spy, Dow all closed with bearish reversal candles after a frothy year and a month of mania and extremes. Large influx of retail traders as well. Go back and look for monthly doji reversal candles that aren’t at a top. Perhaps it’s not the too but only a significant correction or a healthy pullback. Haven’t seen any posts of this around curios on thoughts.
NASDAQ:NDAQShort
by ChiliFingerz
5
AMD ---- Shootng Star, Falling Gap & Upper Cross - Two Shooting Star candlestick patterns appear on Sep 13 and Sep 15. A shooting star denotes price drop is on the way, but need a confirmation that appeared on Sep 17 in this case. When Shooting Star emerge on top of the wave meaning possible price reversal, but if in the mid of the wave the fall is likely to continue but rather stop sooner. - The Upper Cross on Sep 20 following a Falling Gap near the support at $102. Upper Cross actually is a variant of the Long Leg Star, but the opening and closing prices are on a higher level. Even though it denotes the calming of a market situation, it still clings towards an upward no matter whether on top or bottom of a wave.
NASDAQ:AMD
by stalfin
SPY 4 Hour Rising WedgeSentiment:Neutral Although a lot of the technical analysis points to overextension in the $SPY. Price action is largely determined by market psychology as well as recent news catalyst. With that being said, I believe we are in a period of greed rn in which many investors don't imagine $Spy coming down due to low interest rates and the numerous pumps done by the Federal Reserve to keep the market strong. However what comes after a period of greed? A period of fear. If your'e taking on positions remember to practice proper risk management and enter small. Sentiment: Neutral Reasons: 1. Bullish Catalysts 2.Rising Wedge 3. Decrease in Volume and Increase in Selling Pressure 4. Doji and Hanging Man Formation
AMEX:SPY
by DannyNoburu
LTC SHORT 1 : LTC in daily chart is an incremental triangle pattern, and its BREAK OUT has been successfully created 2 :The end of the breakout created is a dojistar that indicates market confusion and indicates the end of the downtrend. 3:Trend in fibo failed to break the 38.96 support line and is a valid support, and if the trend can break the 42.8 resistance, the possibility of uptrend increases. My suggestion is to wait until tomorrow. If the candle is closed tomorrow green and above the dojistar, the probability of uptrend
BITFINEX:LTCUSDShort
by UnknownUnicorn7108745
3