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Dragonfly Doji Candlesticks

Dragonfly Doji Candlesticks

Dragonfly doji candlesticks are a reversal candlestick that are found at the bottom of downtrends. They are shaped like a T and signal a potential reversal to a new uptrend. They have a long shadow and almost no upper body. Enter trade long on the break above the top of the candle. 

Table of Contents

What Are Dragonfly Doji Candlesticks?

Dragonfly Doji CandlesticksDragonfly doji candlesticks are an indecision candlestick and aren’t as common as other patterns. They are part of the doji family. They look like a T with a long lower shadow and no upper wick. Many of times they are black or a neutral color on stock charts. If you want to trade them, make sure you’re buying them (or selling them) at a significant level of support or resistance. 

The dragonfly doji candlestick is a more difficult pattern to find. These candlesticks tell a story whether they’re alone or together with a group.

Candlesticks have 4 data entries that form them. Dragonfly doji candlesticks forms when the open, high of day and close are all the same but the low of the day creates a long shadow. As a result, they look like a T.

It has a long lower wick but no top wick. This is telling you that there were a lot of sellers for most of the day. As a result, buyers came in at the end of the day and pushed the price back up. The price is moved back up to the high of day forming the T shape. These indecision candlesticks show signs of a reversal. 

What It Tells You

Dragonfly doji candlesticks show a reversal. But the implications of said reversal depend on price action and confirmation.

The long wick shows evidence of buying pressure. There is that long tail though 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.

Sometimes the price of the stock doesn’t show it’s actual value because it’s fallen so low. The bulls see that and come back in to buy which in turn pushes the price back up. It’s all about supply and demand. When price heads back up to the high near close, dragonfly’s tell you that demand is starting to outweigh the supply.

Paired With Technical Analysis

dragonfly doji candlesticks

A dragonfly doji candlestick pattern used with technical analysis can be pretty powerful. These candlesticks tend to form around support and resistance depending on the trend the stock is in. These are indecision candles that help confirm reversals.

When a stock hits support or resistance and doesn’t break reversals usually happen. That’s why you need to know technicals. You can using moving average lines like the simple moving average or VWAP as a guide to support and resistance.

Real bodies of candlesticks as well as wicks are also commonly used to find support and resistance. After a downtrend, when they are found at support this can signal a bullish reversal.

Comparatively, after an uptrend, when they are found at resistance this can signal a bearish reversal. Candlesticks as well as moving averages are vital to support and resistance.

How to Trade Dragonfly Doji Candlesticks

  • Traders take a long position when price breaks above the high of the candlestick
  • They use a candlestick close below the low as a stop level.
  • They might take a short at the break of the low and use a candlestick close above high as a stop
Dragonfly Reversal Candle Setup
15 minute Dragonfly reversal on $MSFT. The stock gained several percent after.

Frequently Asked Questions

A dragonfly doji candlestick is typically is a bullish candlestick reversal pattern found at the bottom of downtrends. They look like a hammer candlestick but have much thinner real bodies. They are also found at support levels signifying a reversal to the bullish upside. 


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