Dragonfly Doji

What is a 'Dragonfly Doji'

A dragonfly doji is a type of candlestick pattern that signals indecision among traders. The pattern is formed when the stock's opening and closing prices are equal and occur at the high of the day. The long lower shadow suggests that the forces of supply and demand are nearing a balance and that the direction of the trend may be nearing a major turning point.

Dragonfly_doji.gif

BREAKING DOWN 'Dragonfly Doji'

A dragonfly doji pattern is a relatively difficult chart pattern to find, but when it is found within a defined trend it is often deemed to be a reliable signal that the trend is about to change direction. As you can see from the chart, on the day of the dragonfly doji (shown within the black box), traders realize that the price was sold down to unjustifiably low levels so they send the price back up to where the stock opened. The close near the day's open suggests that demand is again starting to outweigh supply.

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RELATED FAQS
  1. What are common trading strategies when identifying a Dragonfly Doji pattern?

    Learn about the dragonfly doji candlestick pattern and what it signals for traders. Discover what strategies traders use ... Read Answer >>
  2. How do traders interpret a Dragonfly Doji pattern?

    Read about a rare but significant candlestick chart pattern: the dragonfly doji. Learn what a dragonfly doji says about a ... Read Answer >>
  3. What is the difference between a doji and a dragonfly doji?

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  4. How is a Gravestone Doji Pattern, followed by a Dragonfly Doji, interpreted by analysts ...

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