Price Action Part 4: Doji Candle Forex Trading Strategy.


Hello, it’s Kei and I am a professional
trader based here in Tokyo, Japan. In this Part 4 of the price action series,
I will talk about Doji candles and how you can actually trade when you see this Doji
from some real chart examples so that you make profits out of this because you see Doji
many many times in the market and if you master this, you will be finding lots of trade chance
in the market because this is also my favorite strategy. So if you like this topic, please press a
good button, and let’s get started right now! What Doji candle looks like is that when the
starting price and closing price on one single candle stick becomes at around the same level. So let’s say this one is a bullish candle
and if it’s a daily candle for instance, the market started a day at this price level,
went all the way down, then all the way up, and eventually the price closed at this price
level, making a Doji candle stick as a result like this. You know, Doji means “same time” in Japanese,
like when I say “do something Doji,” in Japanese, it means you do something at the
same time, so in forex, literally it tell you where the market’s close price gets
nearly equal to the starting price level within a candle, resulting the wicks pointing up
and down with a tiny body here. And you may know that there are variety of
names to it, like hammer, hanging man, or evening doji star, and on and on, but I’m
not gonna tell you all those patterns out there because first of all, it’s too much
to remember, and what’s more important is how you see the Doji and how you actually
trade with it, right? So if you are curious, you can search it on
google to see all those variations, but on this video, just forget about those names,
and I will just tell you the essence of it. When you see a Doji, it shows the market’s
got no direction. In other words, when you see a Doji candle,
it shows the market is looking for which direction to go, but he is not sure yet. Alright? That’s the only thing you have to remember,
simple. In fact, what I imagine when I see a Doji
is, it’s like someone who is looking around while climbing a mountain. For example, when you see a market like this,
it’s a bull trend, right? And the Doji is right here, right in the middle
of a bull trend. So while the market is moving up bullish,
it’s like he is only looking at the top of the mountain, but when you see a Doji here,
it’s like the market suddenly stopped climbing and just taking a rest, looking around and
enjoying the view. This is how I see the market when I see the
Doji candle. And the market might reverse to the down side
from this candle, or it may continue to go up. Well, in this case, it eventually went up,
but you never know, it may have been going down after this. So let me tell you the ways to expect the
next move. One of the ways you can expect is that when
there’s some kind of strong resistance here, and when you see Doji like this right on that
resistance level, you better prepare for the rejection. In this chart, it eventually went up because
there was no significant resistance here in the past. So when you see a Doji like this, first thing
you have to remember is you have to look for if there’s any support or resistance lines
or trend lines around that price level. And if you don’t, that Doji may not gonna
be so important, it just happened, you know. So whenever you see a Doji like this, where
it’s appearing is the most important thing. Sometimes people say every time they find
the Doji in any place, they just think it’s the reversal signal so they sell right off
and get all those losses. And that’s because they don’t realize
the truth about Doji. Like I said, Doji shows like the market is
resting, looking around and seeing what’s going on, and it doesn’t always mean the
reversal signal. So this is the same idea when you find pin
bars like I explained on the previous video. Well pin bar has more probability for the
reversal by its shape, but this Doji is not. Now, let me show you the real chart example
and explain when it’s going to be a true reversal so you know what I’m talking about. In fact, there was a beautiful Doji candle
appeared on the market in this June on one of the pairs. Look at this chart. This is the weekly chart on EURUSD but look
how beautiful it showed up. There was a clear resistance level up here
and when I found this one, on the next week, after I confirm this Doji at the top, I placed
sell and got all these pips. And later on, it created head and shoulder
pattern and the market kept on going down afterwards. So this Doji right here was right at a tip
of the head on the head and shoulder. So when you see a Doji candle while it’s
on a bull trend or bear trend, one thing you should keep in mind is just to wait, wait
until you see the candle close, and if it ended up with Doji along with other lines,
then you just prepare for the reversal, by checking lower timeframe chart and see if
there’s another reversal signals. In fact, when you look at this Doji in Daily
chart, you see something interesting. This is the Daily chart but look at this one
right here on the top. There are 3 consecutive Doji candles right
here, right? So it clearly shows the market is going no
where, just resting while climbing up the mountain, so in this case, I will draw support
and resistance line, and I will just follow towards the direction that’s breaking out. When you only see 1 doji candle stick, this
break strategy may not gonna work, but when you see 2 or 3 consecutive Doji candles like
this, you just draw lines like this and trade where the market breaks on either direction. In this case, it broke the line downwards,
and kept on going down. So the point is, when you find a Doji, focus
on where it’s appearing. Like back this one on the weekly chart, there
was a clear resistance line right here and in that case, there’s higher possibility
that the price may reverse to the downside after you see this Doji candle at this place. However, like on this example that you saw
earlier, when you see a Doji but when there’s no significant lines that you can draw, the
chance of reversal is going to be relatively lower. So you just let the time go, and wait until
the candle close because until it closes, you never know if it’s gonna be a doji or
not. And if it happens to be a Doji after the close,
just follow towards the major trend direction after the breakout. So again, Doji candle does not always mean
the reversal signal, but where it’s appearing is more important. I will just give you one last example. This is the EURGBP in M15 chart in November
5th. And there’s a beautiful Doji here too, you
see? So when you look at this chart, first of all,
it’s a clear down trend, you know, the candles are below Kumo, Tenkan sen and Kijun sen are
dead crossed, and the yellow Chiko span is way below the candles. So this is Sanyaku Gyakuten signal in Ichimoku
Kinko Hyo, one of the strongest bearish signals. So in this case, you look for the edge to
sell on the market. And if you look at the Doji candle right here,
you see it’s been beautifully resisted by this blue Tenkan sen. So this is one of the signals that you go
sell here, you know, because when you see a Doji right at this Tenkan sen while it’s
on bearish, this can be a signal to sell here in this particular case. And also, there’s another confirmation here. If you draw a line like this, you see a role
reversal, you know, former support now became a resistance here. So this signal also gives you another positive
confirmation of selling from here and you get all these pips. But let’s say a Doji like this one down
here. This is not really important because like
I said earlier, you cannot draw a support or a resistance lines or it doesn’t really
touch the Tenkan sen, so this Doji is something that you can ignore, but rather, this one
up here is something you need to look for so that you can better increase your trade
accuracy. Alright, so now I hope you get a better idea
of how to trade with Doji candles. So if you liked this video, please press a
good button. And on the next video, I will be talking about
Harami engulfing trading strategies because this is also commonly seen price action and
you can get a lot of pips when you master this Harami. So if you don’t wanna miss it, make sure
to subscribe and hit a bell so that you get a notification when it’s uploaded. Also I do live streaming on every Tuesday
and Friday so you get notified on that one too. Alright, I will see you on the next one. Stay Gold! Matane

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