Dragonfly Doji Candlestick Chart Pattern Video

Here’s a typical bullish pin bar with the open and close of the candle marked with two blue lines. You can see how there is an obvious difference between where the pin bar opened and where it closed. There tend to be slight discrepancies between the three values, and since the Dragonfly Doji doesn’t occur during every reversal, it isn’t too reliable for spotting them. Even when it does happen, there’s no guarantee of the price continuing to rise or fall as expected, even after the confirmation candle’s appearance. Let’s take a look at how dragonfly and gravestone doji can play a role in decision support using real-life examples. However, don’t rush to go long right after the candle closes, as the bears might repeatedly try to break the newly formed support.

Dragonfly Doji In An Uptrend

In both cases, the candle following the dragonfly doji needs to confirm the direction. A big bullish candle should be followed by a Doji one with a gap up. The trend reversal is confirmed if the third candle is bearish and opens with a gap down that covers the previous gap up.

The top of a hollow body represents the close price, as the bottom represents the open price, which indicates a price increase during that period. Hammer candle always has a bigger body in comparison to dragonfly doji. As we discussed dragonfly doji candlestick above, dragonfly doji is a kind of doji candle which means they have a small body. Make sure you understand the difference between hanging man candle, hammer candle, and dragonfly doji to prevent from false interpretation.

What Does A Dragonfly Doji Candlestick Tell?

As we mentioned before, Dragonfly doji candlestick is rare on charts. When price trend is downward, this candlestick shows bears pull the price down, but bulls defend and push it up to close it almost precisely on opening price. 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. Buyers were able to push the price higher from the session low all the way back to the open price when the previous candlesticks have been bearish. However, because the candlestick patterns is not confirmed they could be stopped out quickly – or trade in the wrong direction. The long-legged doji is a candlestick that consists of long upper and lower shadows and has approximately the same opening and closing price.

These forecasts are based on industry trends, circumstances involving clients, and other factors, and they involve risks, variables, and uncertainties. There is no guarantee presented or implied as to the accuracy of specific forecasts, projections, or predictive statements contained herein. Users of this article agree that Bybit does not take dragonfly doji candlestick responsibility for any of your investment decisions. On a side note, Dragonfly is the opposite of the Gravestone Doji, which has the same features but is only mirrored. Thus, the Gravestone Doji would anticipate the reversal of a bullish trend. Ideal Dragonflies where the open, high, and close are precisely at the same level are very rare.

Best Strategies Of Using The Dragonfly Doji

The word ‘Doji’ originates from the Japanese word for ‘blunder’ or mistake. As you can imagine, a candlestick chart pattern with the word ‘mistake’ in it can be pretty misleading, but spotting mistakes where others don’t can be quite profitable. Trading the Dragonfly pattern Forex Algorithmic Trading Strategies at the bottom of a downtrend is the main scenario. So, it would be best if you were more interested in entering the market when this condition is met in the first place. If you observe a Dragonfly showing up following a bearish move, be prepared for a trend reversal.

However, you’ll need to use it with the set of essential and efficient technical indicators on this platform. Besides that, you’ll have the perfect timing to do crypto trading when Dragonfly Doji indicates a rising motion from the bottom of this pattern. The dragonfly doji is a candlestick pattern that indicates price action indecision that could lead to a potential reversal. The lack of a body on the candle is the reason why the books say pin bars have a higher chance of causing a reversal than dragonfly and gravestone doji candlesticks.

How Is The Dragonfly Doji Pattern Formed?

These visual patterns give effective interpretation when being incorporated with other crypto indicators. Thus, it shows various hints of price dynamics and the current market’s status towards an investment or asset. If you are new to Forex, then learning how to read a price action chart can be incredibly confusing.

You can using moving average lines like the simple moving average or VWAP as a guide to support and resistance. There is that long tail though The Best Online Brokers For Beginners & Day Traders so sellers are in abundance as well. They are a lot harder to find but within a defined trend, they’re a pretty reliable reversal sign.

Trading Scenario For Dragonfly Doji

The dragonfly doji moves below the recent lows but then is quickly swept higher by the buyers. Both patterns send the same message – the bears may lose the momentum soon and a reversal may be on the cards as the bears failed to force a Piercing Pattern, Technical Analysis Scanner close near the candle’s low. Join thousands of traders who choose a mobile-first broker for trading the markets. The dragonfly and gravestone dojis can also be used as entry triggers on their own, although this is not typically done.

The momentum indicators will confirm whether the price has entered the oversold level and is ready to rebound. When the Dragonfly Doji appears at the top of an uptrend, it can still be a bullish signal that points to a trend continuation. In this case, bears attempted to reverse the bullish move, while the price is likely to carry on with its bullish movement if unsuccessful. As a rule, the Dragonfly Doji is normally at the bottom of downtrends, though there are exceptions. If it shows up at the top of an uptrend, it doesn’t necessarily suggest a bullish or bearish signal. That’s because the next few candles usually decide the subsequent price move.

Posted by: Jesse Pound