what does a doji tell investors 
in japanese doji means the same thing a reference to the rarity of having the open and close price for a security be exactly the same depending on where the open close line falls a doji can be described as a gravestone long legged or dragonfly as shown below image by julie bang investopedia 2019technical analysts believe that all known information about the stock is reflected in the price which is to say the price is efficient still past price performance has nothing to do with future price performance and the actual price of a stock may have nothing to do with its real or intrinsic value therefore technical analysts use tools to help sift through the noise to find the highest probability trades one tool was developed by a japanese rice trader named honma from the town of sakata in the 18th century and it was introduced to the west in the 1990s by steve nison the candlestick chart every candlestick pattern has four sets of data that help to define its shape based on this shape analysts are able to make assumptions about price behavior each candlestick is based on an open high low and close the time period or tick interval used does not matter the filled or hollow bar created by the candlestick pattern is called the body the lines that extend out of the body are called shadows a stock that closes higher than its opening will have a hollow candlestick if the stock closes lower the body will have a filled candlestick one of the most important candlestick formations is called the doji a doji referring to both singular and plural forms is created when the open and close for a stock are virtually the same doji tend to look like a cross or plus sign and have small or nonexistent bodies from an auction theory perspective doji represent indecision on the side of both buyers and sellers everyone is equally matched so the price goes nowhere buyers and sellers are in a standoff some analysts interpret this as a sign of price reversal however it may also be a time when buyers or sellers are gaining momentum for continuing a trend doji are commonly seen in periods of consolidation and can help analysts identify potential price breakouts using a doji to predict a price reversalthe following chart shows a gravestone doji in cyanotech corp s cyan stock from february 2018 following a significant high volume uptrend which could indicate a bearish reversal over the near term following the breakout in this example the gravestone doji could predict a further breakdown from the current levels to close the gap near the 50 or 200 day moving averages at 4 16 and 4 08 respectively traders would also take a look at other technical indicators to confirm a potential breakdown such as the relative strength index rsi or the moving average convergence divergence macd day traders may also put a stop loss just above the upper shadow at around 5 10 in this case although intermediate term traders may place a higher stop loss to avoid being limited out of the trade 