The Doji is a single candle candlestick pattern that signifies indecision among the market participants or equilibrium among the bulls and the bears. This neutral pattern is characterized by a small range for the day and the closing price getting almost equal with the opening price. There are a lot of variations of this pattern. The Long-legged Doji is very tall in size with the open-close taking place around the middle point of the day, implying huge indecision and a probable large move coming. There are also Graveyard Doji, Dragonfly Doji and Northern Doji, Southern Doji followed by a bunch of 2 or 3 candle patterns involving Doji.
Advantages & Limitations Of Doji Pattern
The normal Doji is not a very reliable pattern unless confirmed by more price action. For example, the Northern Doji is found in an uptrend, which is supposed to act as a reversal pattern but frequently found to act as a reversal pattern. Same thing is seen regarding the Southern Doji too. The performance really improves if the Doji seen after a series of strong bullish candles is followed by a strong bearish candle. The failure to hold a new high or a new low increases the probability of success.