Suppose the market is trending upwards, and then one of these two candlesticks occurs:
As I'm sure you've noticed, Candlestick B is a 'Doji' candlestick, which is an infamous signal for a potential trend reversal, among traders who look at price action. The logic behind the Doji candlestick is simple - it indicates that there is indecision in the market, and therefore that the current trend has potential to end. So if Candlestick B were to occur in an uptrend, it may signal that this trend could end.
Conversely, Candlestick B is not a know reversal indicator. However, it indicates that, not only was there indecision about the direction of the current uptrend, but there was also more sellers than buyers in this period. Surely this is more of a bearish sign than a doji? If so, why are we told that the doji is a reversal signal, and that this candlestick is not? If not, why not?
Thanks in advance.
As I'm sure you've noticed, Candlestick B is a 'Doji' candlestick, which is an infamous signal for a potential trend reversal, among traders who look at price action. The logic behind the Doji candlestick is simple - it indicates that there is indecision in the market, and therefore that the current trend has potential to end. So if Candlestick B were to occur in an uptrend, it may signal that this trend could end.
Conversely, Candlestick B is not a know reversal indicator. However, it indicates that, not only was there indecision about the direction of the current uptrend, but there was also more sellers than buyers in this period. Surely this is more of a bearish sign than a doji? If so, why are we told that the doji is a reversal signal, and that this candlestick is not? If not, why not?
Thanks in advance.