Chartered Market Technician Practice Exam 2025 – Complete Prep Guide

A Doji candlestick signifies indecision among traders, which is a critical concept in market psychology. This type of candlestick forms when the opening and closing prices of a security are virtually equal, creating a cross-like appearance. The short body indicates that there has been little price movement during the specified time period, reflecting uncertainty about the market's direction.

In the context of market psychology, a Doji illustrates that neither buyers nor sellers have taken control, leading to a stalemate. This can be vital information for traders, suggesting that participants are reassessing their positions before making the next move. Consequently, a Doji is often viewed as an important signal that could precede a reversal or continuation, depending on the context and preceding price action.

Understanding this psychological aspect helps traders gauge market sentiment, thereby allowing them to make more informed decisions based on the observed indecision reflected in the Doji candlestick.