Dragonfly doji candlestick chart pattern formation



What is Dragonfly doji candlestick chart pattern?

Dragonfly doji candlestick chart pattern is formed when a doji is formed after extended move, in either direction, with opening and closing price at or near the high point of the day with a long lower shadow. The opening and closing price should be as close as possible. There should be no or very small upper shadow. The Dragonfly doji candlestick chart pattern is of significance only if its formed after an upmove . This chart pattern points towards possibility of bearish reversal happening in the market. The price trades lower during initial part of the day, then intraday price reverses and closes at or near the high point of the day.This is because low price is bringing in buyers or sellers are becoming less aggressive.

Dragonfly doji candlestick chart pattern formation after an extended upmove is a sign of weakness in the market and bulls getting tired. As this is happening after a substantial up move the market has shaken itself and this is not good for the existing up move and makes this bearish reversal sign. Its very important to wait for the next day’s market closing for trade confirmation. Next day closing should be below dragonfly doji body and in the lower part of dragonfly doji candle range. The moment dragonfly doji high is violated then this formation is nullified.

Dragonfly doji candlestick chart pattern formation after a sell off points towards a possibility of bullish reversal as buyers are becoming aggressive at lower price level.Its very important to wait for the next day’s market closing for trade confirmation. Next day closing should be above dragonfly doji body. The moment dragonfly doji low is violated then this formation is nullified.

Look out for dragonfly doji candlestick chart pattern formation near supports, breakouts, near important pivot points, fibonacci retracement levels and near critical moving averages like 21,34.50,63,100,200 etc. Dragonfly doji candlestick chart pattern formation near such congestion areas increases the probability of price reversal. In trading there is no certain event it is only probability of occurrence of that event.


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