Doji Dragonfly Candlestick: What It Is, What It Means, Examples

Doji tend to look like a cross or plus sign and have small or nonexistent bodies. From an auction theory perspective, doji represent indecision on the side of both buyers and sellers. Everyone dragonfly doji is equally matched, so the price goes nowhere; buyers and sellers are in a standoff. Together the dragonfly and the size of the next candlestick may indicate a long position from stop-loss.

Because the market is telling you it has rejected higher prices and it could reverse lower. You know Resistance is an area where possible selling pressure could come in. A Gravestone Doji occurs when the open and close is the same price but, with a long upper wick.

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The Dragonfly Doji is a bullish pattern that can indicate a reversal of a price downtrend and the start of an uptrend. Note that most traders will verify the possibility of an uptrend by waiting for confirmation the following day. Gravestone doji form when the open, low and close are equal and the high creates a long upper shadow. The resulting candlestick looks like an upside down “T” due to the lack of a lower shadow. Gravestone doji indicate that buyers dominated trading and drove prices higher during the session.

It is important to emphasize that the doji pattern does not mean reversal, it means indecision. Doji are often found during periods of resting after a significant move higher or lower. Ideally, to increase the accuracy, we want to trade the Dragonfly Doji candlestick pattern by combining it with other types of technical analysis or indicators. Risk management for trading the dragonfly doji pattern is hard because you should consider many factors along the way. Dragonfly doji candlestick has different meaning during uptrend or downtrend. Dragonfly doji candle forms when bulls and bears fight hard to move the price during a candle session but none of them succeed in the end.

What Is the Dragonfly Doji Used for?

Other techniques, such as other candlestick patterns, indicators, or strategies are required in order to exit the trade when and if profitable. In isolation, a doji candlestick is a neutral indicator that provides little information. Moreover, a doji is not a common occurrence; therefore, it is not a reliable tool for spotting things like price reversals. There is no assurance that the price will continue in the expected direction following the confirmation candle.

The longer the white candlestick is, the further the close is above the open. This indicates that prices advanced significantly from open to close and buyers were aggressive. While long white candlesticks are generally bullish, much depends on their position within the broader technical picture. After extended declines, long white candlesticks can mark a potential turning point or support level. If buying gets too aggressive after a long advance, it can lead to excessive bullishness. The dragonfly doji is a Japanese candlestick pattern that acts as an indication of investor indecision and a possible trend reversal.

What is the difference between dragonfly doji and gravestone doji?

This support zone could be a specific Fibonacci level, lower band of Bollinger, moving average line or historical support level. Although it is commonly used for stock trading, trading cryptocurrency with it is not as difficult. When the pattern appears near the bottom of a downtrend, it can be interpreted as a strong buy signal.

There are also several 2- and 3-candlestick patterns that utilize the harami position. Meanwhile, the dragonfly doji candlestick is a trendy type of candlestick among traders. In the first example, a bullish dragonfly doji candle on a daily timeframe showed a temporary price retracement then price continued to go down.

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StockCharts.com maintains a list of all stocks that currently have common candlestick patterns on their charts in the Predefined Scan Results area. To see these results, click here and then scroll down until you see the “Candlestick Patterns” section. Long-legged doji have long upper and lower shadows that are almost equal in length.