INDODAX is not soliciting for users to buy or sell dragonfly doji assets as an investment or for profit. All crypto assets trading decisions should be made independently by the user. As mentioned, this candlestick will form when the opening and closing prices are almost balanced for a certain period. The dragonfly doji is used to find information on a trend reversal. Look for signs of confirmation on trend reversal then open trade and put your stop loss on near local support/resistance. Moreover, You should pay attention when and where this candle forms and if it’s near the support zone in a chart.

The doji candlestick is just one of the numerous candlestick patterns in technical analysis. Of course, the theory is essential, but you won’t succeed without practicing. You can try and practice your knowledge on theLiteFinance free demo account without registration. TradingView is a leading charting and technical analysis platform that offers a wide range of tools for analyzing candlestick patterns, including the dragonfly doji. The daily chart shows a dragonfly doji at the end of an uptrend.

Or most commonly in shorter time frames – 5 minutes to tick level time frames. Let’s look at an example of a doji dragonfly with a support level. This long lower wick suggests that sellers sold aggressively during the period of the candle. Since the candle closed near the open the price was able to recover and close near the high. Spinning topsappear similarly to doji, where the open and close are relatively close to one another, but with larger bodies. In a doji, a candle’s real body will make up to 5% of the size of the entire candle’s range; any more than that, it becomes a spinning top.

AUD/USD oscillates at around the 20-day EMA on risk-on mood, RBA minutes eyed – FXStreet

AUD/USD oscillates at around the 20-day EMA on risk-on mood, RBA minutes eyed.

Posted: Mon, 20 Mar 2023 07:00:00 GMT [source]

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. The probability of leading to a profitable trade is very high.

Example of How to Use the Dragonfly Doji

The morning Doji star is a three-candlestick pattern that works in a strong downtrend. If, after a long bearish candle, there is a gap down and a formation of the Doji candlestick, it’s a signal of possible reversal up. In order to confirm this, the third candle should be bullish and open with a gap up covering the previous gap down.

gravestone doji candlesticks

The doji is a valuable technical indicator for identifying potential trend reversals. Whether you’re a seasoned trader or a beginner, understanding this pattern can enhance your trading toolkit. Like all candlestick patterns, to trade the dragonfly doji is very straightforward. The long lower tail of a dragonfly doji indicates that large amounts of selling have flooded the market, which caused downward pressure on the security price during a certain period.

Is a Doji pattern bullish or bearish?

However, it is essential to consider candle formations and confirm with other candlestick patterns. Dragonfly doji pattern can’t define a particular profit target, and it entirely depends on price action and especially if the trend is downward or upward. Read previous sections carefully, and you’ll find out how to choose a reasonable profit target. Dragonfly doji candle forms when bulls and bears fight hard to move the price during a candle session but none of them succeed in the end. What does the appearance of the hammer candlestick pattern on the chart indicate? Read on to find out what the bullish and bearish hammers warn about.

Such a pattern can only occur when the market trades down and then reverses but does not move above the opening price. The dragonfly doji is a Japanese candlestick pattern that acts as an indication of investor indecision and a possible trend reversal. There are quite a few Doji Candlesticks you can refer to in your technical analysis. Mastering their interpretation and knowing how to implement the info into your trading sessions is vital for your trading success. It’s a Japanese candlestick pattern mostly known to day trading currency traders. It is repeated quite often on financial charts, so it is possible to see a trading signal and an investment opportunity.

Again, you can go short on the next candle open, stop loss either above the high and then look to ride the move down lower. So, in this case, the market came up higher into the area of resistance which is simply the highs of the Long-legged Doji. And you can use the level and the areas on your chart to establish a bias. When you see this chart, it can difficult to just trade off it directly.

Next, there is a pullback, and the price starts a new downtrend towards the neckline of the double top pattern, where the price meets support. Another long-legged doji appears at level 0.9746, which means market uncertainty and quite strong buying pressure. The following S&P 500 SPDR ($SPY) chart shows several gravestone doji that were automatically identified using TrendSpider. In each case, the gravestone doji were followed by a bearish reversal, as the candlestick pattern would predict. These reversals could be confirmed with other indicators as well.

The Dragonfly Doji pattern is also a mirrored version of the Gravestone Doji candlestick pattern. Everything that you need to know about the Dragonfly Doji candlestick pattern is here. 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. The content on this website is provided for informational purposes only and is not intended to constitute professional financial advice. Trading any financial instrument involves a significant risk of loss.

Does Hammer and Dragonfly Doji Candlesticks are same?

It is used as a technical indicator that signals a potential reversal of the asset’s price. Now that you’ve learned the basics of trading the dragonfly doji candlestick patterns, its time to check for the latest formations of these candlestick patterns on the stock price charts. They both clearly show an action taking place the same way pin bars do and they both have the same effect upon the traders in the market when they form.


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. In most cases, the length of the lower shadow is used as an indication of the strength of an upcoming reversal pattern. Market data is provided byNYSE,ICE,CME Group,NASDAQ,IEX,CBOE,Barchart Solutions,Polygon,Benzinga,Intrinio,Quiver Quantand others. Real-time and historical price data for most listed securities is delivered via ICE Data Services.

When prices are returned to the level that they opened, the dragonfly doji candlestick is complete. Often a dragonfly doji’s lower shadow acts like an area of support for future prices because the lower shadow is in an area where bulls are willing to counteract bears and buy to push prices higher. A dragonfly doji candlestick is a candlestick pattern with the open, close, and high prices of an asset at the same level.

doji pattern

Both indicate possible trend reversals but must be confirmed by the candle that follows. Following a downtrend, the dragonfly candlestick may signal a price rise is forthcoming. Following an uptrend, it shows more selling is entering the market and a price decline could follow. In both cases, the candle following the dragonfly doji needs to confirm the direction.

Dragonfly Doji in Uptrends and Downtrends

It means the advantage was equal in relation to both bulls and bears, which makes the bidders indecisive. Therefore, when trading this pattern, it is necessary to confirm the signal using other candlestick patterns or technical indicators. It is important to remember that candlestick patterns are a representation of market psychology so let’s break down what goes on behind the scenes when we see a dragonfly doji print on our charts. 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. It leads to the body of dragonfly doji to be located somewhere at the top side of the candle which makes it appear like the dragonfly creature . A bearish abandoned baby is a type of candlestick pattern identified by traders to signal a reversal in the current uptrend.

A combination of these patterns means that bears control the market. Furthermore, the price tries to break out the resistance trendline but sellers return the price back during the same period. Dojis are popular reversal candlestick patterns in the financial market. They are formed when the price opens and closes at the same level in a sign of consolidation. The dragonfly is an important reversal pattern that you should consider using in your day trading.


Doji has a lot of variations, for example, gravestone, long-legged doji, dragonfly, doji following a long bullish candlestick, etc., which could be confusing. You can learn more about how to interpret candlesticks in the articleHow to Read Candlestick chart. When a new trading period begins, the price rises sharply, then decreases. By the end of the period, the price returns to the starting mark or the level close to it. The information contained in this post is solely for educational purposes, and does not constitute investment advice. You should carefully consider if engaging in such activity is suitable to your own financial situation.