What is a 'Dragonfly Doji'

A Dragonfly Doji is a type of candlestick pattern that signals indecision among traders. It's formed when the security's high, open, and close prices are the same. 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. For example, the Dragonfly Doji in the image below could signal a bullish reversal.

BREAKING DOWN 'Dragonfly Doji'

A Dragonfly Doji pattern is a relatively difficult candlestick pattern to find, but when it is found within a defined trend, it is often considered a reliable signal that the trend is about to change direction. Often times, 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 moving forward.

The Dragonfly Doji is similar to the Long Legged Doji and the Hammer candlestick patterns. The key differences are that the Long Legged Doji has an upper shadow and the Hammer has a difference between the open and closing prices. That said, many traders will take some liberties when identifying Dragonfly Dojis by allowing small gaps between the open and close prices.

The opposite of a Dragonfly Doji is a Gravestone Doji, which occurs when the low, open, and close prices are the same. Often times, the Gravestone Doji occurs at the top of a bullish uptrend and could represent the start of a bearish reversal. And, the standard Doji - a cross with an equal distance between the high and low and the open and close - indicates more indecision than the Dragonfly Doji candlestick pattern.

Using the Dragonfly Doji

Dragonfly Doji patterns with a longer lower shadow tend to be a greater indicator of an upcoming reversal since the bulls were forced to post a stronger recovery from the lows for the period.

The Dragonfly Doji works best when used in conjunction with other technical indicators, especially since the candlestick pattern can be a sign of indecision as well as an outright reversal pattern. A Dragonfly Doji that appears on a high volume day might be a more reliable indicator that one that appears on relatively low volume. In addition, the Dragonfly Doji might appear in the context of a larger reversal chart pattern, such as the end of a Head and Shoulders pattern. It's important to look at the whole picture rather than relying on any single indicator.

  1. Long-Legged Doji

    The long-legged doji is a candlestick pattern that consists of ...
  2. Tri-Star

    A tri-star candlestick pattern signals a possible reversal in ...
  3. Bearish Abandoned Baby

    A bearish abandoned baby is a type of candlestick pattern identified ...
  4. White Candlestick

    A white candlestick is a point on a candlestick chart representing ...
  5. Rickshaw Man

    The rickshaw man is a long candlestick with a doji body that ...
  6. Spinning Top

    A spinning top is a candlestick pattern with a short real body ...
Related Articles
  1. Trading

    Advanced Candlestick Patterns

    Go beyond the basics! Learn to identify and trade island reversals, kicker patterns and more.
  2. Trading

    The 5 Most Powerful Candlestick Patterns

    Statistics show unusual accuracy for the buy and sell signals of certain candlestick patterns.
  3. Trading

    Candlestick Charting: What Is It?

    Discover the components and basic patterns of this ancient technical analysis technique.
  4. Trading

    Shopify Stock Breaks Out After Q2 Beat

    Shopify broke out from an ascending triangle after beating estimates, but traders should watch these support levels.
  5. Trading

    Candlesticks Light The Way To Logical Trading

    Crowd psychology is the reason this technique works. Find out how to make it work for you.
  6. Investing

    Find Turning Points With Single-Day Patterns

    On their own, single-day patterns can be unreliable, but that doesn't mean they can't be used effectively.
  7. Trading

    Understanding the "Hanging Man": The Optimistic Candlestick Pattern

    A hanging man is a candlestick pattern that hints at the reversal of an uptrend. The candlestick is recognizable by a small box atop a long, narrow "shadow."
  1. 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 >>
  2. What are common trading strategies when identifying a Doji pattern?

    Use simple trading strategies to profit with doji candlestick patterns; a doji can signify a trend change or a temporary ... Read Answer >>
  3. What signals do traders watch for that signal a change in a bull market?

    Discover the various signals of bull market tops and what traders and analysts look for as signs of an impending bearish ... Read Answer >>
  4. How are Morning Star patterns interpreted by analysts and traders?

    Understand the elements of the morning star candlestick pattern and how this reversal signal is interpreted by traders and ... Read Answer >>
  5. What is the difference between a Hanging Man and a Hammer Pattern?

    Understand the difference between the hanging man and hammer candlestick patterns, the components of each and what they indicate ... Read Answer >>
  6. How do I implement a forex strategy when spotting a Three White Soldiers Pattern?

    Learn two variations, one aggressive, one more conservative, of a forex trading strategy that can be used with the three ... Read Answer >>
Hot Definitions
  1. Fibonacci Retracement

    A term used in technical analysis that refers to areas of support (price stops going lower) or resistance (price stops going ...
  2. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
  3. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  4. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  6. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
Trading Center