bullish dragonfly doji candlestick

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Bullish Dragonfly Doji

Direction: Bullish

Type: Reversal

Reliability: Moderate

Pattern is strongest after an established bearish trend

A candle forms with a very small to almost nonexistent body with a long lower wick

The lower wick is at least twice as long as the candlestick body

Little or no upper wick

In a bearish trending market the dragonfly illustrates an unsustainable sell-off, where price drives up to new lows, but buyers take control of the trend by market close.

Although this formation is a moderate to weak signal, it is a warning for longs that the downtrend is losing momentum and bull may retake the market soon.

Most candlestick analysts will wait to confirm the signal, watching for a blue candle on day two.

Dragonfly vs. Hanging Man

The Bullish Dragonfly Doji Pattern is a rare single candlestick pattern that occurs at the bottom of downtrend. It is very similar to the Bullish Hammer Pattern, except on a Dragonfly Doji the opening and closing prices are nearly identical (no body). The Bullish Dragonfly Doji is more reliable than a Bullish Hammer and it tends to be a stronger bullish signal.

In non-FX markets traders accept a gap between day one and day two. Since such gaps are unlikely in the 24 hour Forex Market, when this pattern is translated into FX, the Dragonfly could also appear like a Hanging Man, and would still be the same moderate strength.

Regarding strength of signal, the more the dragon fly looks like a Doji, the more it reflects buyers taking control of the sell-off, and the strong the bullish reversal signal.