What is Dragonfly doji?

The Dragonfly Doji is typically interpreted as a bullish reversal candlestick chart pattern that mainly occurs at the bottom of downtrends. The Dragonfly Doji is a Candlestick pattern that can help traders see where support and demand are located. It can be used with other indicators to identify a possible uptrend.

Can a dragonfly doji reversal occur after a downtrend?

When the dragonfly doji emerges after a downtrend, it presents a compelling case for a possible upside trend reversal. When it shows up during an uptrend, a bearish reversal may soon be forthcoming. The market psychology underlying the appearance of a dragonfly doji candle is of great significance to forex traders.

How to use dragonfly Doji in forex trading?

As with all candlestick patterns, the dragonfly doji can be used in a variety of trading strategies by the observant and prudent forex trader. Some popular strategic approaches that incorporate the dragonfly doji include: Trend reversal strategy: Using the dragonfly doji to anticipate trend reversals is a widely favored approach.

What does a Doji dragonfly candle look like?

Source: WarriorTrading. As the diagram above illustrates, the dragonfly doji’s shadow or tail extends well below its thin body, and it has a tiny or nonexistent upper shadow. This special appearance that resembles the delicate wings of a dragonfly has given the doji dragonfly candle its unusual name.