Monday, January 2 saw a DOJI in the Nifty daily chart. The DOJI has come about after a down move with today as the lowest day so far. A DOJI at the lows suggests that bears are getting uncertain. Quite often, the DOJI will become a reversal signal. When this happens, traders can enter almost at the high or low of the trend. But, not each DOJI becomes a reversal. Some of these DOJI’s do nothing.
So, what will today’s DOJI show? We should take the context in which the pattern comes. It has come about after a decline, suggesting that sellers may be exhausted for the short term. Today was also an NR7 – narrowest range in 7 days. This pattern represents contraction, suggesting that a big move may be coming soon. This move could be on the upside!