I thought a Doji indicated a reversal. Why would it indicate holding a support or resistance level, other than indicating indecision and therefore holding on support or resistance.
You should never use a doji by itself as a signal to enter a trade. As you have stated, dojis indicate [I]indecision[/I], nothing more. This gives you an opportunity on your open positions to tighten your stops, or take profits on part of your position. To enter a new trade, you should wait for a confirming candle. For example, the evening/morning star patterns are examples of the appearance of a doji first, but waiting until you get the confirmation of the reversal in a subsequent candle. Again, never use a doji by itself as a reason to enter new positions.
Makes since! I was referring mainly to the Pivot Points section of Baby Pips school where it mentions support and resistance and a candle stick pattern, such as a doji to confirm a buy or sell signal. Mainly a signal in the same direction not a reversal. So a Doji can be used, as example, to confirm a non reversal pattern.
You still dont understand what a doji is. First learn what true support and resistance is to even gather what you ccan use a doji for. Go back and look at you charts for dojis. See how many time price reverses and how many times it does not. You will see for the most part it is 50/50. So 50/50 is not to bad as long as you know how to read it and use very sound risk engagement. A doji can be a very powerfull formation dont get me wrong. When your right it is very rewarding. But again when your wrong well just hope you have a tight stop. That is one good thing about a doji you can keep stops tight. I used to trade them religiously and did well but after a while they started to kick my butt. Now I rarely trade them at all unless everything else is on my side. Good luck they can be profitable very profitable I will say I made a lot more than I lost trading them. But they can go both ways
They can be used as follows in conjunction with other technical analysis methods such as swing highs lows, support and resistance ect ect:
-price rejections,
-confirmation,
-short term trend reversal,
-Trend continuation
-Swing highs and lwos
-Support and resistance showing rejection, whipsaws,
-In conjunction with short term candle stick patterns like a bullish/bearish 3 method continuation pattern
-Showing sentiment in the underlying trend
-Show exhaustion in the underlying trend
They should be used with all your other methods.
They are almost like any other method. Most methods aren’t good by themselves however when you grab a bunch of methods and stick them together they work great.
Goodluck!
Nison in his book says that dojis are much more significant for top reversals than bottom reversals. But like everybody else said, you definitely need confirmation. You should interpret a doji or any other candlestick pattern as a sign that the trend may change direction soon, even sideways.
Now that’s what I’m talking about! I am just getting other views on patterns and such. Trying to get different points of views, but it is becoming interesting!