Dragonfly Doji

Search Dictionary

Definition of 'Dragonfly Doji'

A Dragonfly Doji is a type of candlestick pattern used in technical analysis of financial markets. It typically appears on a chart during a trend and is formed by a single candlestick. The Dragonfly Doji has a long lower shadow, no upper shadow, and a small body at the top of the candlestick.

The Dragonfly Doji pattern suggests that the trend may be losing momentum and that a potential reversal may be on the horizon. The long lower shadow indicates that the bears were in control of the market early on in the trading period, pushing prices down. However, by the end of the period, the bulls were able to push the prices back up to the opening level, resulting in the small body at the top of the candlestick. This indicates a potential shift in market sentiment from bearish to bullish.

Traders often use the Dragonfly Doji pattern as a potential signal to buy, as it indicates that the downward trend may be losing momentum and that a reversal could be on the horizon. However, it is important to note that the pattern should be used in conjunction with other technical analysis tools and indicators to confirm the potential reversal and to make informed trading decisions.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.