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Investopedia Academy - Technical Analysis - Lesson 5.3 - Candlesticks Doji - YouTube
Channel: Mike's Trading Channel
[7]
Here we're looking at doji's you'll聽
notice that there is no real body聽聽
[12]
what we're seeing in a doji聽
is evidence of indecision聽聽
[16]
the market and again will stick with the theme聽
of daily charts in this case the the open聽聽
[23]
and the close are the exact same price or pretty聽
much near the exact same price maybe a couple of聽聽
[29]
pennies off and what the doji is saying that in聽
the middle of the day the market rallied and sold聽聽
[36]
off but closed basically where it opened this is聽
evidence of indecision we often see these doji's聽聽
[42]
at turning points sometimes the doji's don't close聽
near the open in the middle of the trading period聽聽
[49]
in some cases the wicks are substantially longer聽
than normal candlesticks and what this is this聽聽
[56]
is evidence of reversal we definitely see聽
these at the end of trends suggesting that聽聽
[62]
something is changing so there's two聽
types of doji's that i want to focus on聽聽
[66]
one of them is the dragonfly doji where the聽
opening in the close of course is right around聽聽
[71]
the same level at the highs of the day but in the聽
middle of the day the market sold off dramatically聽聽
[78]
only to return and close where it originally聽
opened when you see something like that in a聽聽
[83]
downtrend in all likelihood something is probably聽
changing that is a bullish indicator that is a聽聽
[90]
heads up that maybe we should be covering some聽
shorts maybe we should be putting on new long聽聽
[95]
positions but definitely a reversal candlestick聽
within a downtrend for sure a gravestone doji is聽聽
[101]
the opposite this is something that we're looking聽
for in up-trends as evidence over a reversal or聽聽
[107]
a change in that uptrend so the gravestone聽
doji in this case obviously close right near聽聽
[112]
the open as is the case with every type of doji聽
but in the middle of the day rally dramatically聽聽
[119]
only to sell off and go out at the lows聽
of the day when you see a candlestick like聽聽
[124]
this showing up in a strong uptrend in all聽
likelihood that trend is getting exhausted聽聽
[130]
the sellers are starting to take control even if聽
it's just a short term so when you see these sorts聽聽
[135]
of doji candlesticks it doesn't necessarily聽
mean that the market is going to reverse聽聽
[140]
but in all likelihood the market the trend in that聽
market is probably changing maybe from an uptrend聽聽
[146]
to a sideways trend maybe from a downtrend to a聽
sideways trend but that indecision is something聽聽
[151]
that we want to look for so let's take a look at聽
a few examples of these candlesticks i think this聽聽
[156]
is a great one we are looking at a huge base in聽
the Dow Jones transportation average and as it's聽聽
[162]
breaking above resistance which we're going to聽
discuss in a later module you have a nice green聽聽
[168]
hollow candlestick a bullish development coming聽
out of a major base we take this as evidence that聽聽
[174]
the buyers are in control not the sellers here聽
we are looking at a bullish reversal candlestick聽聽
[182]
okay these are the lows in u.s interest rates聽
into in the summer of 2012. this was key support聽聽
[191]
and you could see a nice聽
big green hollow candlestick聽聽
[195]
really opening below the close from the previous聽
day and closing substantially above it that sort聽聽
[203]
of reversal pattern is something that we want to聽
look for here's the opposite this is a bearish聽聽
[210]
reversal candle this is the Russell 2000 in 2008聽
the market gaped up substantially above resistance聽聽
[219]
to make a new all-time high in the Russell 2000聽
small cap okay this is in the early fall of 2008聽聽
[226]
but notice how on an intraday basis you can see聽
the candlestick look at the long wick the shadow聽聽
[234]
and notice the massive reversal and because it's聽
a filled candlestick that is suggesting to us聽聽
[241]
that the market is closing substantially below聽
where it opened so not only are we closing way聽聽
[246]
below the opening price but way below the high of聽
the day and it could not hold the all-time high聽聽
[253]
that bearish indication led to a massive crash and聽
if you were looking at the types of candlestick聽聽
[260]
i would argue you would have a huge advantage聽
over those who were unaware at the time.
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