Doji Star Trading Strategy
The doji star hesitation strategy is one of the forex trading strategies that gets overlooked and undervalued. It helps to understand Sushi Roll Pattern.
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Doji Star Hesitation Strategy and Definition of the Doji Star
There are many definitions of a doji candle – you might find more than 10 types! I’ll stick to the general definition here, which I believe works best.
The doji star hesitation strategy I’m describing is very simple to understand as a signal, and it’s easy to spot on charts too.
An irregular doji candle has a small, centered body, with prominent wicks on both ends of the body.
As the name suggests, this candlestick pattern represents hesitation – the market is trying to tell you it tried to move up, or tried to move down, but ultimately closed near the opening price.
The idea is to catch the breakout from that hesitation. In general, we aim to catch the upward move where price breaks above the high, or the downward move where the market breaks below the low of the doji candle.
Above: the basic way to trade this is to wait for a break out of the hesitation the candle represents. We do this by catching price as it breaks above the candle’s range (buy), or below the candle’s range (sell).
There are also some more advanced tactics where we wait for one end of the doji candle to break, but we only act if that break turns out to be false and price reverses to break the other end instead.
Doji candles print very frequently, and can be seen across several timeframes – they’re very easy to spot with the naked eye.
Above: yes, doji candles form frequently across timeframes.
One important thing to remember is that the more price data you pack into a candlestick pattern, the higher its degree of reliability.
In other words: a doji on the daily timeframe carries more weight than a doji on the 5-minute timeframe – and that is true for any forex trading strategy.
Don’t Trade Every Doji You See
What’s the difference between a good doji candle signal and a bad one?
We want to target them at points on the chart that carry high technical value – locations where you know the market has a “decision” to make.
Look for key markers at locations such as:
- Established support and resistance levels
- Swing levels within the trend
- Trendline structures
- Any point on your chart where technical analysis tells you the market has to “break or bounce”
Check out this doji candle setup below…
Above: the hesitation signal forms at a weekly support level – where we strongly expect a bounce.
With that logic in mind, we’re now only looking for bullish breakouts.
Above: as expected, price bounced away from the key level, and broke above the high of the hesitation range – in our bullish trading setup.
Doji Star Hesitation Strategy and Technical Analysis
It’s all about using your technical analysis to find the key areas where you know price action has a decision to make – “break it or bounce off it.” Wait for a doji star hesitation to form, then trade the expected outcome, which is usually a bounce.
Above: with simple technical analysis we can easily identify a clear resistance level on the chart.
The doji candlestick pattern forms without a defined bias, so we’re looking for a bearish follow-through through resistance and trading the bounce, using a break of the doji’s low as our trade trigger.
Above: the market follows through on the bounce breakout, and drops sharply.
We can also use this in trending conditions to catch trend continuation.
The best place to target a doji candle within a trend is at swing levels, where old support turns into new resistance, or vice versa.
Above: in an uptrending environment, look for a doji hesitation candle forming at swing levels, then target breaks in the same direction.
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Above: a clean result after trend momentum pushed through the swing point, breaking the top of the doji candle to trigger the trade, which kept climbing for days.
It’s very easy to do good technical analysis first, then frame a doji breakout idea to see if it fits.
Above: a look at what separates a good hesitation breakout opportunity from a bad one.
Remember that the doji candle pattern is very common – it’s your job to use core technical analysis to filter the bad setups from the good ones.
If you don’t have strong chart-reading skills, and you can’t grasp the underlying structure or context of the market – you may run into a recurring problem trying to trade these candlestick patterns.
When you apply this forex strategy – just remember that you’ll see a lot of doji candles print, but only a small subset of them will be good trading opportunities.
A Quick Note on Doji Signals
Looked at on its own, the doji star hesitation strategy tells traders that neither buyers nor sellers are in control, and it is a sign of hesitation or neutrality. Some traders believe a doji signals an upcoming price reversal when read alongside other candlestick patterns, but that is not always the case – it can also be a sign that buyers or sellers are building momentum to continue the trend.
With the doji star hesitation strategy, it’s important to remember that a doji alone doesn’t provide much of the information needed to make a decision. Before acting on any signal, always weigh other patterns and indicators, and make sure you stick to your trading plan and risk management strategy. The doji candle is a very common candlestick pattern – doji hesitation is what I use as a secondary, confirming signal.
A few key points to remember:
- – Do your technical analysis first, before treating the doji star hesitation strategy as a trading opportunity. In most cases, simple price action analysis will rule it out as a viable trade.
- – Tie it to important technical points on the chart, where you know the market has a direction it needs to take, then plan to trade the break or bounce through the doji breakout.
- – Don’t lean toward trading doji candles on low timeframes – the less data packed into the candlestick, the less reliable the pattern.
Read more:
- Forex Explained: How to Simply Join a Forex Community
- Forex Education Basics and Concepts in Q&A Format
- What Is a Demo Account in the Forex Market? Explaining the Forex Demo Account
Disclaimer: This article is for educational purposes only and does not constitute investment advice. The doji star hesitation strategy described here is a technical analysis method, not a guaranteed trading system – candlestick signals can and do fail, and past chart examples do not predict future results. Trading forex and CFDs on margin carries a high level of risk to your capital and may not be suitable for all investors, due to the impact of leverage. This page may contain affiliate links; if you open an account through them, easytradeweb.com may earn a commission at no extra cost to you.
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