Indecision candles are the market's way of pausing to think. When Doji, Spinning Tops, or High Waves appear, they signal that buyers and sellers are in equilibrium—neither side has won the battle.
Understanding these patterns is crucial for traders who want to anticipate market transitions. Indecision candles often appear before explosive moves, as compressed energy must eventually release.
The Doji: Market Equilibrium
The Doji is the most recognized indecision candle. Its defining characteristic is that the open and close prices are virtually identical:
Formation: Price trades above and below the open, but ends up closing at or very near where it opened. The result is a candle that looks like a cross or plus sign.
Interpretation: The Doji represents indecision. Neither buyers nor sellers could push price in a decisive direction during the period.
Key Variations:
Standard Doji
Open equals close with similar upper and lower wicks. Classic indecision.
Gravestone Doji
Open equals close at the low. Bears tested but couldn't close lower.
Dragonfly Doji
Open equals close at the high. Bulls tested but couldn't close higher.
Long-Legged Doji
Extremely long wicks on both sides. Maximum volatility and indecision.
A Doji alone doesn't tell you direction—it only tells you no one won. Always look at where the Doji forms: at support it may signal a bullish reversal; at resistance, bearish. Combined with volume, Dojis at key levels are powerful.
Spinning Tops vs High Waves
Both Spinning Tops and High Waves show indecision, but with important differences:
Spinning Top: Small body with moderate upper and lower wicks. The wicks should be longer than the body but not dramatically so.
High Wave: Similar small body, but with dramatically long wicks—much longer than the body. This indicates extreme volatility within the candle period.
High Waves indicate maximum uncertainty. When you see a High Wave, expect increased volatility ahead. This is often a "calm before the storm" candle. Position sizing should be reduced near these patterns.
Double Doji: The Pressure Cooker
When two consecutive Doji candles appear, the pattern becomes exponentially more significant:
Formation: Two Dojis back-to-back, representing two periods of complete indecision. This is rare and should catch your attention immediately.
Why It's Powerful: Two periods of indecision create compressed energy. The market cannot remain undecided forever—eventually, one side will win.
Trading: Wait for a close beyond the Doji range on increased volume. The breakout direction becomes your trade direction.
Doji at Support and Resistance
The location of the Doji is as important as its formation:
At Support
Buyers are absorbing selling. May signal the end of a decline and potential reversal up.
At Resistance
Sellers are absorbing buying. May signal distribution and potential reversal down.
Trading Indecision Candles
Key Takeaways
Indecision doesn't mean no trade: While Doji candles are neutral, they signal potential turning points. Use them as early warning signs.
Location is everything: A Doji at support signals bullish reversal; at resistance, bearish. Never interpret indecision candles without context.
Double Dojis are explosive: When you see two consecutive Dojis, expect a big move coming. The compression must release.
High Waves increase volatility: These candles signal increased market uncertainty. Reduce position sizes and widen stops near High Waves.
Wait for confirmation: The candle after the Doji determines direction. Don't guess—let the market tell you which way.