What is a dragonfly doji?

A dragonfly doji can occur after a price rise or a price decline. The open, high, and close prices match each other, and the low of the period is significantly lower than the former three. This creates a "T" shape. The appearance of a dragonfly doji after a price advance warns of a potential price decline.

Why is Dragonfly doji a weak signal?

During an uptrend, a Dragonfly Doji is considered a weak signal. This is because it shows how buyers cannot create a new session high, indicating market uncertainty about the price’s direction. When the pattern appears after an uptrend, the confirmation candle will close below the Dragonfly Doji.

What does dragonfly mean?

The Dragonfly can mean that bears were able to press prices downward, but an area of support was found at the low of the day and buying pressure was able to push prices back up to the opening price. Thus, the bearish advance downward was entirely rejected by the bulls.

Are Dragonfly dojia and hammer candles the same?

Dragonfly Dojia and Hammer candles are two different patterns, although they share some similarities. They both anticipate bullish reversals, so confusing them is not too problematic. However, Doji opens and closes at the same price, while a hammer opens lower and closes under the opening price.