Can we forecast a currency price by combining 2 daily dojis into 1?

In one of our previous experiments, we explored the accuracy of forecasting direction of trend based on daily dojis and got pretty impressive results. Today we’ll take a closer look at situations when there are 2 dojis after the strong trend and explore if we can take this pattern as a basis for forecasting currency rates.

For this experiment, we took situations when there were 2 close to each other dojis after a strong trend, which continued for a few days. We mentally combined such candles (combining their bodies and shadows) and watch if the trend they were preceded by, continues then.

At first, we tried to take only classic dojis into account but then we saw that there are few such situations with classic dojis. That’s why we also included other varieties of dojis to our experiment.

Let’s look at the data obtained:

The accuracy of forecasting is lower here. In 23 cases of 30, there was a good result. So the accuracy we got is 76,7%.

We can make the following conclusion from this experiment:

Conclusion 1. Combining 2 dojis into 1 is an acceptable and effective way to quickly forecast price movement for the next few days.

Conclusion 2. Due to the results of 2 experiments related to doji, mental combining decreases the accuracy of forecasting.

And our trading algorithms can find such situations and predict price increase by also conducting technical analysis.

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