Doji is a result of a standoff, where neither buyers or sellers could pull the price in their direction. It can be that a huge sell order is countered or matched by another huge buy volume. Doji is characterized by its long tails and a body where closing price is either the same or a little higher or lower than its opening price. A trend preceded by a doji indicates that supply and demand are in equilibrium and may start to reverse when a barrier is broken. However, when a doji is formed after a strong trend it can indicate that the level is being digested or gains are being locked by investors or traders and may still continue the surge in the same direction when a second wave of traders hits it in the same direction.

A Doji is more relevant after a strong trend, in this case when a doji forms after a strong uptrend, it is indicative that buy orders are diminishing or there is a huge resistance forming just above the doji. This resistance are the sellers jumping in front of a huge locomotive, but if their numbers are weak, they would not be able to stop a strong uptrend and the price would continue to go higher. However, if sell pressure overwhelms the current strength of buyers, it is likely that the trend would reverse and would go further when nervous traders on long position protects and locks their gains by closing their positions.

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