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Dragonfly Doji Candlestick Pattern: Full Guide

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Further buying pressure, and preferably on expanding volume, is needed before acting. Such confirmation could come from a gap up or long white candlestick. Hammers are similar to selling climaxes, and heavy volume can serve to reinforce the validity of the reversal. As with the dragonfly doji and other candlesticks, the reversal implications of gravestone doji depend on previous price action and future confirmation. Even though the long upper shadow indicates a failed rally, the intraday high provides evidence of some buying pressure. After a long downtrend, long black candlestick, or at support, focus turns to the evidence of buying pressure and a potential bullish reversal.

The reason is, there must have been a preceding downtrend for a Dragonfly Doji to indicate a potential reversal. However, to cut long story short, the long lower shadow of the Doji indicates that for at least part of the period, sellers were in a position to take control. That naturally increases the selling pressure during the period and that is a warning sign for the traders. The Gravestone Doji is a candlestick pattern that appears in financial market technical analysis.


A gravestone dragonfly doji candlestick meaning can be used as a sign to take profits on a bullish position or enter a bearish trade. You’ll seldom see this candlestick pattern, but if you do, expect volatility to “die out” for a while before it picks up again. If you do, you’ll never have to memorize a single candlestick pattern again.

What Does the Dragonfly Doji Look Like?

Long-legged doji candles are deemed to be most significant when they occur during a strong uptrend or downtrend. The long-legged doji suggests that the forces of supply and demand are nearing equilibrium and that a trend reversal may occur. This is because equilibrium or indecision means that the price is no longer pushing in the direction it once was. A long-legged doji signals indecision about the future direction of the underlying security’s price. This contrast of strong high and weak close resulted in a long upper shadow. Conversely, candlesticks with long lower shadows and short upper shadows indicate that sellers dominated during the session and drove prices lower.

How to trade the doji candlestick pattern –

How to trade the doji candlestick pattern.

Posted: Wed, 16 Nov 2022 08:00:00 GMT [source]

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. The size of the dragonfly coupled with the size of the confirmation candle can sometimes mean the entry point for a trade is a long way from the stop loss location. The dragonfly doji is a quite dramatic pattern, involving quick and sudden shifts from buying to selling pressure. The trend strength, which in some form is a sign of the conviction of a market, is often of great help to determine the validity and accuracy of a pattern, like a dragonfly doji. Every candlestick pattern tells us a unique story about how the market has moved, and how market participants have acted.

Therefore, it is crucial to conduct thorough analysis before exiting a position. While some traders may act on the one-candle pattern, others want to see what the price does after the long-legged doji. Like any trading strategy, you must manage your risk by establishing stop losses and profit goals and tweaking them as market conditions evolve. To safeguard your trading capital, always use appropriate risk management techniques. The Gravestone Doji is less reliable in some market conditions, like low trading or liquidity volume, where the pattern’s emergence may be less significant.


Blending the candlesticks of a Bearish Engulfing Pattern or Dark Cloud Cover Pattern creates a Shooting Star. The long, upper shadow of the Shooting Star indicates a potential bearish reversal. As with the Shooting Star, Bearish Engulfing, and Dark Cloud Cover Patterns require bearish confirmation. While a doji with an equal open and close would be considered more robust, it is more important to capture the essence of the candlestick. Doji convey a sense of indecision or tug-of-war between buyers and sellers. Prices move above and below the opening level during the session, but close at or near the opening level.

candlestick pattern would also take a look at other technical indicators to confirm a potential breakdown, such as the relative strength index or the moving average convergence divergence . Day traders may also put a stop-loss just above the upper shadow at around $5.10, although intermediate-term traders may place a higher stop-loss to avoid being stopped out. Sometimes called a “Rickshaw Man”, the long-legged Doji is like the standard Doji but has very long upper and lower shadows. While the price traded quite high and low during the trading session, it closed unchanged. Traders would also take a look at other technical indicators to confirm a potential breakdown, such as therelative strength index or themoving average convergence/divergence .

Doji and Trend

The Dragonfly Doji is a Candlestick pattern that can help traders see where support and demand are located. It can be used with other indicators to identify a possible uptrend. The Gravestone Doji may represent a false signal, which doesn’t always result in a market reversal. Before making important trading decisions, it is critical to confirm the pattern with other technical analysis tools like moving trend lines, averages, and candlestick patterns. After a decline or long black candlestick, a doji indicates that selling pressure may be diminishing and the downtrend could be nearing an end.


However, traders should always look for signals that complement what the Doji candlestick is suggesting in order to execute higher probability trades. Additionally, it is essential to implement sound risk management when trading the Doji in order to minimise losses if the trade does not work out. To confirm the Gravestone Doji, utilize additional technical indicators like moving averages, trend lines, and other candlestick patterns. A confirmation of the pattern can boost the odds of a profitable trade. It represents a bearish pattern during a reversal that will be followed by a downtrend in price.

Trade the breakout

Keep in mind all these informations are for educational purposes only and are NOT financial advice. It means for every $100 you risk on a trade with the Dragonfly Doji pattern you make $5.4 on average. Thus, the bearish advance downward was entirely rejected by the bulls. If you are just starting out on your trading journey it is essential to understand the basics of forex trading in our New to Forex guide.

It could also be that bearish traders try to push prices as low as possible, and the bulls fight back and push the price up. The Doji is just one of the many candlesticks all traders should know. Boost your trading knowledge by learning the Top 10 Candlestick Patterns. However, the Gravestone Doji Candlestick should be interpreted in tandem with other indicators and chart patterns to corroborate the bearish trend.

The long-legged doji is a type of candlestick pattern that signals to traders a point of indecision about the future direction of a security’s price. This doji has long upper and lower shadows and roughly the same opening and closing prices. In addition to signaling indecision, the long-legged doji can also indicate the beginning of a consolidation period where price action may soon break out to form a new trend. These doji can be a sign that sentiment is changing and that a trend reversal is on the horizon.

For this reason, traders will often combine it with other technical indicators before making trade decisions. The Shooting Star is a bearish reversal pattern that forms after an advance and in the star position, hence its name. A Shooting Star can mark a potential trend reversal or resistance level. The candlestick forms when prices gap higher on the open, advance during the session, and close well off their highs.

If you want to discover the other candlestick patterns strategy guides, then head over here for a full list of them. The concept of these Doji candlestick patterns can be seen across different timeframes. The Doji pattern is a neutral indicator and does not provide strong buy or sell signals on its own. Traders should consider the overall market context and broader trends when interpreting Doji patterns. As with any trading tool, it’s essential to practice and experiment to enhance trading decisions. A Doji candle pattern is generally seen as a sign of indecision in the market, as there is no clear direction being taken by buyers or sellers.

What Is a Doji Candle Pattern, and What Does It Tell You? – Investopedia

What Is a Doji Candle Pattern, and What Does It Tell You?.

Posted: Sat, 25 Mar 2017 23:43:16 GMT [source]

In isolation, a doji candlestick is a neutral indicator that provides little information. Moreover, a doji is not a common occurrence; therefore, it is not a reliable tool for spotting things like price reversals. There is no assurance that the price will continue in the expected direction following the confirmation candle. Candlestick charts can be used to discern quite a bit of information about market trends, sentiment, momentum, and volatility. In addition to the reliability concern, another limitation of the doji pattern is that it cannot provide price targets.

In Japanese, “doji” (どうじ/ 同事) means “the same thing,” a reference to the rarity of having the open and close price for a security be exactly the same. Depending on where the open/close line falls, a doji can be described as a gravestone, long-legged, or dragonfly, as shown below. In the strategy examples below, we’ll use the ADX indicator, which is one of our favorite trading indicators, to measure the trend strength. Candlestick patterns seldom work very well on their own, and most traders would agree that you need to include some type of filter or extra condition to make them tradable. On average markets printed 1 Dragonfly Doji pattern every 74 candles. It looks like an upside-down version of the Dragonfly and it can signal a possible downtrend.

Ideally, the confirmation candle also has a strong price move and strong volume. Alone, doji are neutral patterns that are also featuredin a number of important patterns. A doji candlestick forms when a security’s open and close are virtually equal for the given time period and generally signals areversalpattern fortechnical analysts. The Dragonfly Doji is typically interpreted as a bullish reversal candlestick chart pattern that mainly occurs at the bottom of downtrends.

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