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Definition

 

Bullish Dragonfly Doji consists of a single candle, forecasting a trend reversal. A Bullish Dragonfly Doji is very similar to the Bullish Hammer formation. The only difference is the size of the body of the two formations. Bullish Dragonfly Doji has no body, because the opening and closing prices are equal. On the other hand, Bullish Hammer has a small body.

  • Trend: Reversal
  • Expected trend: Bullish
  • Previous trend: Bearish
  • Reliability: High
  • Type: Bullish
  • Number: 1

Recognition

  • The market is in a downward trend.
  • There is a Doji.
  • The Doji has an extremely long lower shadow.
  • The Doji has no upper shadow.

Interpretation

The market is in a downward trend. After the share opens, the price continues to decrease. Then the falling stops and the price starts to increase. The share closes really close to the opening price at the end of the day. It is not recommended to open short positions at this point. If the market opens higher on the next day, short position owners will close their positions.

Important factors

A Bullish Dragonfly Doji is more reliable than the Bullish Hammer formation. The formation is highly reliable, but a confirmation is necessary (may come from a white candle with higher closing price or gap).