Introduction to the Doji Candle Detection Indicator
Doji patterns are candlestick patterns with a very small body relative to other candles. This candlestick pattern is a telltale sign of price rejection especially when it forms on an area where price may reverse.
The Doji Candle Detection Indicator is a tool which helps traders objectively identify doji patterns.
What is the Doji Candle Detection Indicator?
The Doji Candle Detection Indicator is a technical trading tool which was developed to help traders identify doji candlestick patterns.
This indicator identifies doji patterns and indicates it by plotting a lime horizontal bar on a separate indicator window in line with the doji candlestick pattern on the price chart.
It also provides signal alerts and push Email alerts whenever it detects a doji pattern.
How the Doji Candle Detection Indicator Works?
The Doji Candle Detection Indicator has an algorithm which detects doji candlestick patterns based on the technical description of a doji. These are candlestick patterns with an extremely small body relative to other candlesticks. To identify this pattern, the indicator uses a threshold multiplied to the Average True Range (ATR) of the tradeable instrument. If the body of the candle does not exceed the threshold, then the candle is considered a doji pattern. The indicator would then plot a lime bar to indicate the availability of the doji pattern. It would also trigger the signal alert and the Email push notification.
How to use the Doji Candle Detection Indicator for MT4
The Doji Candle Detection Indicator has several options within its indicator settings which can be modified.
“Signal Color” allows users to modify the color of the bar that the indicator would plot.
“MT4 Alert” toggles the alert notification on or off.
“Email Alert” toggles the Email push notification on or off.
Doji candles can be used as a possible reversal signal indication since doji patterns can be considered as an indication of price rejection. However, it should be in confluence with other technical analysis indications. It could be that the doji forms at an oversold or overbought level. It could also be a doji on a support or resistance level or a doji on a dynamic support or resistance level on a pullback within a trending market.
Buy Trade Setup
When to Enter?
Open a buy order whenever a doji pattern is identified by the Doji Candle Detection Indicator in confluence with another bullish technical analysis indication.
When to Exit?
Close the trade as soon as price action shows signs of a possible bearish reversal.
Sell Trade Setup
When to Enter?
Open a sell order whenever a doji pattern is identified by the Doji Candle Detection Indicator in confluence with another bearish technical analysis indication.
When to Exit?
Close the trade as soon as price action shows signs of a possible bullish reversal.
Conclusion
The doji pattern can indicate a reversal, but it is not perfectly accurate. This is why it is important that it is traded in confluence with another technical analysis indication. It should only be a part of a bigger trading strategy instead of a standalone entry signal.
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