Definition
Bearish Dragonfly Doji is a reversal pattern which consists of one candle. It is very similar to the Bearish Hanging Man formation. The only difference is in the size of the candles’ body: the body of the Bearish Hanging Man is much longer.
- Trend: Reversal
- Expected trend: Bearish
- Previous trend: Bullish
- Reliability: Moderate
- Type: Bearish
- Number: 1
Recognition
- The market is in an upward trend.
- A Doji is formed above the previous day's trading range
- The lower shadow of the Doji is extremely long
- The Doji has no upper shadow
Interpretation
The market is in an upward trend. After the market opens, the share price starts to fall, the market is dominated by sellers. The price sinks below the opening price. At the end of the day, the price starts to rise and the share closes near the opening price. This rally indicates the presence of sellers. If the market opens lower on the next day, many long position owners will decide to leave their positions.
Important factors
Bearish Dragonfly Doji is more reliable than Bearish Hanging Man. It is recommended to wait for a confirmation on the next day. This confirmation can be a black candle with lower closing price or with a downward gap.
