A doji has open and close prices almost identical, forming a cross or plus shape. It represents a perfect balance of buying and selling pressure, signaling market indecision.
Bulls and bears are deadlocked. Price oscillated throughout the day but returned to near the open, with neither side gaining an advantage. At trend extremes, a doji signals momentum exhaustion and potential reversal.
A standalone doji has low signal strength (win rate 54%) and must be interpreted by its location. A doji at an uptrend peak warns of a top; at a downtrend bottom it may signal a base. Always wait for the next candle to confirm.
A doji is a 'warning sign,' not a trade signal. The next candle's direction is more important.