The Bullish Dragonfly Doji Candlestick Charting For Dummies® Book

crypto assets

It’s formed when the asset’s high, open, and close prices are the same. Dragonfly doji candlestick pattern on bitcoin chart in the cryptocurrency marketIn the second example, a bullish dragonfly doji appeared after a bearish one on a daily timeframe. These candles prevented the price to go lower, and they showed a sign of support, so price continued to go higher. Different from the positive and negative candlesticks, a doji candlestick does not have a rectangular body. It is a rare type with equal open and close prices, which gives it a cross shape. Without other information, a doji candlestick is a neutral indicator, as it alone does not provide sufficient information to make trading decisions.

When Does A Dragonfly Doji Show Up? – Lawyer Monthly Magazine

When Does A Dragonfly Doji Show Up?.

Posted: Mon, 20 Jun 2022 07:00:00 GMT [source]

Depending on the strength of the trend, different levels are more likely to work better with the Dragonfly Doji pattern. Here you can learn more about the different Fibonacci retracement levels. To find a bullish RSI Divergence we want to see the price on a downtrend first, making lower lows and lower highs. In most cases, the length of the lower shadow is used as an indication of the strength of an upcoming reversal pattern. Gravestone DojiSince the opening and closing is very closer to the low of the day, it might suggest that the up-trend might be coming to an end. If all three conditions are met then traders who have spotted these clues may consider going long on their chosen instrument as Dragonfly Dojis often lead into strong moves upwards.

Dragonfly Doji: Discussion

While the formation of dragonfly doji candlestick does not necessarily indicate a true indecision state, it does mean that sellers could not continue to remain strong . It primarily acts as a warning signal that a trend reversal may be coming up. A dragonfly doji candlestick is a candlestick pattern with the open, close, and high prices of an asset at the same level. It is used as a technical indicator that signals a potential reversal of the asset’s price.


The chart above of the Silver ETF shows a dragonfly doji at the bottom of a downtrend and subsequent reversal upward. The long lower shadow gives the price levels at which bulls entered the market and were able to repel the bears and return the price to the opening price for the day. Therefore, the long lower shadow should stand as an area of support for bulls in the future. Professional traders use the candlestick patterns to predict whether the price will continue moving in a certain direction or whether a reversal will happen. The Dragonfly Doji candlestick pattern is a very difficult one to trade which often leads many traders down the wrong path. Based on how the dragonfly doji works in the marketplace, it acts as a reversal 50% of the time.

Why Dragonfly And Gravestone Doji Candlesticks Are The Same As Pin Bars

First, this chart configuration marks the end of a downward trend movement. That means one can enter an upward position by setting a tight stop loss and taking a relatively low risk. The stop loss can be set on the low of the Japanese candlestick representing this graphic pattern. Moreover, when we observe this recurring pattern, we feel the buying pressure, and therefore we can position ourselves quite serenely on the purchase. When Dragonfly Doji appears on a price chart, this candle is a signal that should alert to a probable change in the trend, namely a bearish or bullish reversal.

Trading candlesticks like the dragonfly doji needs strict discipline and emotion-free trading. Candlestick trading is a part of technical analysis and success rate may vary depending upon the type of stock selected and the overall market conditions. Use of proper stop-loss, profit level and capital management is advised. Though the dragonfly doji forms very infrequently on the price charts of all kinds of assets – be it stocks, indexes or exchange-traded funds , it signals that a big and important change may be coming. Trading on the formation of the dragonfly doji depends upon the context and trend, and trading decision should be taken based on the type of situation that leads to formation of the dragonfly doji. If dragonfly doji candle forms when the price is reaching a resistance, it shows temporary price reversal, but you should follow further price action to confirm it.

Dragonfly Doji candlestick has the same opening and closing price while Hammer candlestick has the closing price slightly below/above the opening price of the candlestick. When the price will open then it will move up then it will again return to the opening price. It will break an important level due to the huge momentum of sellers. Due to the presence of large pending buy orders at the support zone, the price will return and rise to the opening price.

Understanding the Dragonfly Doji

There is no assurance the price will continue in the expected direction following the confirmation candle. I have explained the conditions for an ideal dragonfly Doji but now I will explain the strategy to get a high probability trend reversal signal. Because every dragonfly Doji candlestick will not reverse the bearish trend. You will have to add confluences to increase the winning probability of a trade setup. Let’s take a look at how to use both of these important reversal candlestick patterns to improve your trading.

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

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

Posted: Sat, 25 Mar 2017 22:33:34 GMT [source]

The, high and open prices match each other.It refers to a potential reversal in the market. The likelihood of an upward reversal in a downtrend following a Dragon Doji will be proportional to the strength conveyed by the length of the confirming candlestick body. The inability of the market to continue its downtrend reduces the bears’ negative sentiment. That’s why try to focus on making a perfect trading system by using candlesticks for entry or trend confirmation. A Doji candlestick is an indication of equal forces of buyers and sellers in the market. Furthermore, it can be challenging to predict the potential profit from trading this doji as these candles generally do not provide a price target.

Dragonfly candle is more reliable than a relatively low volume one. Candlestick is a type of charting that contains the open, close, high, and low prices of an asset for a specific time period. Candlestick charts are more informative than typical line charts, which only provide the close price or average price. Thus, candlestick charts are more prevalently used in technical analysis than line charts. A dragonfly doji is a candlestick pattern that signals a possible price reversal.


He found a link between the price and supply and demand of rice and the emotions of the trader. Candlesticks depict the emotions of the traders by visually representing the size and colour of the candlestick. Dragonfly Doji indicate that there may be an imminent change in market sentiment or some sort of reversal from bullishness to bearishness happening soon.

Opening a Dragonfly Doji Trade

Determine significant support and resistance levels with the help of pivot points. If the dragonfly doji is in an uptrend, then read about the northern doji. Successful traders will typically wait until the following day to verify the possibility of an uptrend after a Dragonfly. Or most commonly in shorter time frames – 5 minutes to tick level time frames.

The candle is composed of a long lower shadow and an open, high, and close price that equal each other. A doji candlestick pattern is considered to be a transitional formation since it doesn’t signal either one of a continuation or a reversal of the trend. Another reason I think gravestone and dragonfly doji’s should be treated the same as bullish and bearish pin bars is because traders get trapped in losing trades on the wick of the candle. Dragonfly and gravestone doji candlesticks look incredibly similar to pin bars, you may have seen one before and assumed what you were seeing was a pin bar due to how much they look-alike. Two candlestick patterns which have a lot in common with pin bars both in terms of their construction and what they show in the market are the dragonfly and gravestone doji.


There are three dragonfly candlestick candlesticks – the gravestone doji, the long-legged doji, and the dragonfly doji. RSI of dragonfly denko patterns is an indicator of a potential reversal. This candlestick pattern appears when the open and close of a stock’s day range are almost the same.

Hence this might suggest that a downtrend might be coming to an end. Now there are various types of Doji candle patterns, and the first is, of course, the standard one. It means that the open and close have happened at the same level. Typically it is used to find and point reversal patterns in share or asset prices. The Dragonfly can mean that bears were able to press prices downward, but an area of support was found at the low of the day and buying pressure was able to push prices back up to the opening price.