Japanese Sail Patterns – Doji
DojiLa Signal Doji is one of the most relevant signs of Japanese sail patterns. It clearly indicates that bullies and bass players are in equilibrium or in a state of indecisiveness. When it appears at the end of an extended trend, its implications on which the trend is about to end are considerable. The Japanese say that always when this signal appears, it is always perceived. In other words, when a Doji appears at the top of a trend, especially in an oversold area, you must be prepared to close your operation. On the other hand, when this signal is seen at the bottom of an extended pessimistic trend, it is necessary to buy signals the next day to confirm the investment. If not, the weight of the market could hold to the minimum of the trend.
The Doji signal is made up of a candle. It is formed when the opening and closing occurs at the same level or very close to it in a specific period of time. This simply forms a cross.
As shown in the illustration above, the horizontal line represents the opening and closing that occur at the same level. The vertical line represents the total trading range during this time. When viewing this signal is overbought or oversold conditions, (overbought or oversold conditions can be defined using other indicators such as stochastic); It becomes a very high probability of investment situation. When the signal appears, it is proving that there is currently indecisiveness in the extreme part of the trend. It is important to note that this indecision can be represented in a few variations.
Criterion for the Doji signal:
Opening and closing are equal to or almost equal.
The length of the shadow should not be overly long, especially when this view at the end of the trend.
Doji Signal Improvements:
A disparity from the closing of the previous day is set for a strong investment movement.
A large volume during the day of the signal increases the chances that a day of escape has occurred although it is not a necessity.
It is more effective after a long sailing body and usually an exaggerated daily movement compared to the normal daily trading range seen in most of the trend.
The recognition and understanding of the psychology of the relationship of Japanese sail graphics will offer completely new perceptions to investors to understand the optimal times to buy and sell. Japanese rice traders have realized that prices do not move based on fundamentals but move based on the perception of those fundamentals by the investor. The Doji signal is one of the most predominant indicators of investment. It is very effective in all periods of time, if we use graphs of 1 minute, 5 minutes, or 15 minutes for a day of trading or graphs daily, weekly and monthly, for impulsive traders or investors in the long term.
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