Doji... It's a Japanese Candle Stick that foretells a change.

Some Japanese candle sticks can tell you when change is in the air, or should I say the FOREX Market.  Candle sticks used in a series can tell the tale of the FX Market sentiment just by the way they interact on your chart.  Using them correctly, like reading this blog, can help forecast the future so to speak.  In every trade, when to get in, when to get out, and when to tighten your stops are critical questions to ask when it comes to capturing a profit or reducing your loss especially in the fast moving FOREX Market. 

A Doji, is a candle that provides an indication that the market has stalled, it is one of the best helpers when it comes to answering the critical questions regarding direction and configuring your risk as you updated a FX Trend Trading Strategy.  Found in four different configurations, Doji’s are formed when the entry and exit points on the candle are the same.  The lines of the candle, or wicks, above and below that point; are indicative of the markets energy, providing a hint to its next move.

Take a gravestone Doji for example.  It presents with a wick found only on top of the entry and exit point and predicts an ominous attempt to rally the FX Market into a higher position that has failed.  The bulls just didn’t have it in them to carry the market up.  When you see a gravestone after a significant upward move, look for the market to fall off as the energy may not be there to go higher.

In reverse, the dragonfly Doji is just the opposite, only a wick below the entry and exit point of the candle is presented.  As you might expect, a dragonfly can be a precursor to the market moving higher if it is found directly following a down trend.  While the suggested moves in the FOREX Market place that these Japanese Candles present, they are not always correct.

As part of your FX Trend Trading Strategies, I would suggest that you use a cautious approach and do as I do, tighten your stops allowing for some volatility in the event the market wants to continue its trend.  Usually I let the market come to me; however you may want to just exit your trade in the event you have that “gut” feeling.