Doji candles formed on the weekly charts of the major market averages last week.
A doji candle has a very narrow opening and closing range, often with a a high wick or long lower shadow. They are often seen at market tops but can reflect uncertainty and as such can be continuation candles.
Now take a look at the ten minute chart. There seems to have been a concerted effort to support the SPDR S&P 500 ETF (SPY) late in the day last Thursday and Friday.
If the market had faded into the close of last week a doji would not have formed on the weekly chart. More likely, the opening and closing range would have been situated in the lower end of the candle’s range with a high upper wick. This is called a shooting star candle and has more bearish reversal implications than the doji.
The markets have bounced sharply off their December lows and a pause would be in order, but no individual candle or clearly defined pattern is a guarantee of future market direction. Monitor follow-through price action next week and remember, at this point in price, a limited pullback or period of consolidation would be healthy for the market.