Indecision candlestick patterns signify that both buying and selling pressures are in equilibrium.
And these are 2 indecision candlestick patterns that you should know:
• Spinning top
• Doji
Let me explain…
Spinning top
Here’s how to recognize it:
• The candle has long upper and lower shadow
• The candle has a small body
And here’s what a Spinning top means…
1. When the market opens, both the buyers and sellers aggressively tried to gain control (which results in upper and lower shadows)
2. At the end of the session, neither have gained the upper hand (which results in a small body)
In short, a spinning top shows significantvolatility in the market but with no clear winner.
And yes, it looks like the toy you played when you were young.
Moving on…
Doji
A Doji represents indecision in the markets as both buying and selling pressure are in equilibrium.
Here’s how to recognize it:
• The candle’s open and close are around the middle of the range
• The upper and lower shadows are short and about the same length
Although Doji is an indecision candlestick pattern, there are variations with different significance.
They are:
1. Dragonfly Doji
2. Gravestone Doji
I’ll explain…
1. Dragonfly Doji
Unlike a regular Doji which opens and closes near the middle of the range, the Dragonfly Doji opens and closes near the highs of the range with long lower shadow.
This tells you there is a rejection of lower prices as buying pressure stepped in and pushed the market higher towards the opening price.
2. Gravestone Doji
Unlike a regular Doji which opens and closes near the middle of the range, the Gravestone Doji opens and closes near the lows of the range with long upper shadow.
This tells you there is a rejection of higher prices as selling pressure stepped in and pushed the market lower towards the opening price.
