First of all, what in the world is a doji?
Doji form when a security's open and close are virtually equal. The length of the upper and lower shadows can vary and the resulting candlestick looks like a cross, inverted cross or plus sign. Any bullish or bearish bias is based on preceding price action and future confirmation.
Now that we all know what a doji is, what does the doji mean? Can we make money off of this trading pattern?
When is the last time BAC had a double doji whereby the open and close were nearly the same?
Let us look at what happened the last time these patterns came to fruition for Bank of America. This was back in November of last year when there were two consecutive dojis. What we just learned is that by itself these doji don't mean much. So what happened after the doji days?
Immediately following the doji, we see a red candlestick. The reversal was confirmed with that candlestick and we can see the continuation to $5 per share. Sometimes this pattern will break up or break down. In this case study, we saw it break down.
Fast forward to yesterday's chart. What do we see here? What you mean there is a double doji? So the question is now where will this stock break? It has to break one direction. What will be telling is today's action. This will determine which direction it is more likely to break.
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