Technical Glossary / Candlestick Patterns
Dragonfly Doji
A doji with a long lower wick and almost no upper wick. Price sold off and came back to the open.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
Open and close sit at or near the high. The low is far below. Sellers pushed the period down and buyers brought it all the way back.
How to identify it
A T shape: a flat top where open and close meet, and a long lower shadow. The body is a line, not a small square. A small square is a hammer, not a dragonfly.
Bullish reading
At the end of a decline, or on a known support, the long lower wick says the selloff failed within the period. Traders look for the next bar to close above the high.
Bearish reading
In a downtrend, without support, the same shape can be only a pause. If the next bar takes out the low, the wick was not a floor.
Common mistakes
Buying the dragonfly before it closes, or in the middle of a free fall with no level under it.
Limitations
One wick does not show whether the bounce had volume. The next period decides if the low held.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.