Dragonfly Dozi

 

A Dragonfly Doji is a type of candlestick pattern that appears in technical analysis of stock charts. It signals potential reversals and is especially important in intraday trading. And it is formed at the bottom of the trend characteristics:

1. Structure

• The opening, closing, and high prices are almost the same.

• A long lower shadow extends downward, showing that the price dropped significantly but recovered before the close.

• There is little to no upper shadow.

2. Interpretation

• Bullish Reversal (at a downtrend):

• Sellers pushed the price lower, but buyers regained control and pushed it back up.

• This indicates potential trend reversal to the upside.

• Bearish Reversal (at an uptrend):

• If it appears after a strong uptrend, it can signal a loss of buying momentum and a possible trend change.

3. Trading Strategy

• Confirmation is key: Wait for the next candle to confirm the trend direction.

• Volume analysis: Higher volume increases the pattern’s reliability.

• Support and Resistance: If formed at key levels, the reversal signal strengthens