Candlesticks charting is a technical tool used for Forex analysis consisting on individual candles that indicate price action. Candlestick charts are popular in day trading for two reasons. They offer a wide range of trading information and their design makes the charts easy to read and interpret the prices action.
Candlestick charts are among the earliest known forms of technical analysis dating back to trading in the Japanese rice markets in the 18th century. Candlestick charts or just candles for short provide a more visually intuitive representation of price action than you get from simple bar charts. They do this through the use of color and by more clearly breaking out the key price points of each forex trading day open, close high and low.
Various forms of the 'DOJI':
Doji candlesticks have the same open and closing price or at least their bodies are extremely short. A Doji should have a small body that appears as a thin line.
Doji candles suggest indecision or a struggle for turf positioning be- tween buyers and sellers. Prices move above and below the open price dur- ing the timeframe session but close at or very near to the open price. Neither buyers or sellers were able to gain control with a result that is essentially a draw between the bulls and the bears.
There are four special types of Doji candlesticks. The length of the upper and lower shadows can vary and the resulting candlestick gives a formation similar to a cross, inverted cross or plus sign. The word 'Doji' refers to both the singular and plural form. When a Doji forms on your chart, ensure special attention is given to the preceding candlesticks.
Doji candlestick pattern is one of the most important candlestick patterns. Representing the equilibrium between supply and demand in the markets, it is a clear trend reversal signal. Communicating the prices open and close at or near the same level, candlestick Doji indicates indecision of investors. It is therefore very important to recognize Doji. If the Doji makes appearance after a long uptrend, it is a warning to investors that the trend is either close to peaking, or has already peaked in the open markets. But if it is visible after a long downtrend, it means that the prices have been forced down.